– Home prices in most
Canadian real estate markets have yet to see any sort
of meaningful impact from the COVID-19 pandemic. Right now though, is this the beginning of the Canadian real estate crisis? Have we just hit the tip of the iceberg? Because mortgage arrears rates, those are mortgages that
are 90 days or more behind, are starting to creep up. The Bank of Canada has a report out projecting that they will be double what they were in the 2008
crisis later next year. And 20% of Canadian households don’t have two months of mortgage payments saved up. Will low interest rates,
which are right now at all-time lows, and
a reduced stress test be enough to keep prices where they are and the Canadian real
estate market afloat? We’re gonna go over all that and more on this episode of Bald
Prairie Real Estate. (epic music) Hey guys, welcome back to
Bald Prairie Real Estate, my name is Matthew Pfeifer,
I’m a real estate agent in Regina, Saskatchewan. Now if you like this sort of content, real estate news, market updates, all those tips and tricks I’ve got for ya, go ahead, hit that like and
subscribe button right now, I really appreciate all
the support you guys have been giving me. Thank you very much. Now what do you get from a pampered cow? Well you get spoiled milk of course. (rim shot) Hey guys, if you guys are watchin’, this is my first post,
it’s the May long weekend, I hope you guys are
enjoying your long weekend, trying to get out, have some fun. I know it’s tough, you can’t
maybe spend as much time at the lake or with family and friends, that’s what I’d like to be
doing normally on this weekend. But we can’t do that, so instead, I’m gonna try to get out on my bicycle, get a little bit of a ride in, and get some work done. If you wanted to know a little
bit more about me personally, I’m gonna put my Instagram
handle right here. You can go ahead and follow me. Not much for business on there, it’s mostly just personal
stuff like my coaching life, astronomy, cycling, and
those kind of nerdy things that I like to do. But go ahead, you can follow me and kinda learn a little
bit more about me. So, this episode of
Bald Prairie Real Estate is gonna be more of one of those informal real estate roundups. So I wanna go though a
couple of news topics here, couple of ones we’re gonna go over here. First and foremost is
mortgage rates are in arrears, those are startin’ to
creep up a little bit and the Bank of Canada’s
projecting those to go even higher. Secondly, we’re gonna talk about where current mortgage rates are right now and a possible small
reduction in the stress tests, allowing you to purchase a
little bit more of a house. And the third thing I’ve
got, kind of a bonus tip that I think is gonna be
really, really important for buyers going forward,
is some of the new programs that are available through a
few of the different lenders. And these are cashback
programs at low interest rates for things like small
renovations and repairs. So we’re gonna have all that
and more on this episode. ‘Kay let’s get into it here. First topic, so what I wanna go over here is mortgages that are in arrears. So for those of you that don’t know, a mortgage in arrear is a mortgage that has not been paid
for at least 90 days, and these things get reported and tracked by government, CMCH,
Stats Canada, et cetera. Why that’s important is obviously people are behind on their mortgage, or in danger of losing their house to foreclosure. Right now those rates
have started to creep up a little bit, and there’s a new report out from the Bank of Canada that they expect those mortgages in arrears rates to be double what they
were in the 2008 crisis later on next year. That’s a pretty scary headline. And I can see it already in the comments, ’cause people have been tellin’
me for an awful long time how wrong I am about
the real estate market and the crash is near. Hold up one second here. I wanna talk a little
bit more about a reality and not just the headline. The Bank of Canada’s
projecting those mortgages and arrears rates to go up to 0.8%. 0.8% of all mortgages may be ending up in an arrears state by the middle of 2021. What does that give you in context to say, another situation like
the 2008 mortgage crisis in the United States? Just before that market crash, their mortgage arrears rate was 3.5%, or five times higher than
what the Bank of Canada is projecting right now. So yes, this is not good when people are behind on their mortgages. Yes, this will cause some
people to have to sell their house at a lower price or end up in a foreclosure situation. But, those headlines are a lot scarier than the potential reality. 0.8% of all mortgages, significantly lower than even the worst times
in Canadian history, the 1990s recession was
a really good example, that again too people, around
3% mortgage arrears rates. So yes the headline sounds scary, but the reality isn’t quite
as scary as the headline. Next is a little update on the Canadian mortgage stress test. Again if you don’t know what that is, that’s a qualifying
rate, you have to qualify at two full points or in this case, it’s now maybe potentially
gonna go down to 5.04%. You have to qualify on that in order to qualify for a mortgage. What they’re tryin’ to do is
see if interest rates go up, is a buyer able to withstand
those higher interest rates? Now that started the year at 5.19%, it’s gone through a couple of drops now. It looks like it might actually drop here, potentially, below 5% at 4.99. Now this is not a massive change here. For an average buyer, it’s gonna allow you to spend a couple thousand dollars more. It’s not a significant amount. But any time that starts
to come down a little bit, closer in line with where
current mortgage rates are, that is better for people
who are gonna purchase, ’cause they can spend a
little bit more money. This is really only gonna help people that are on the absolute razor’s edge of being able to afford
a house or not be able to afford a house. And while we’re talkin’ mortgages here, I wanna talk quickly about
where mortgage rates are at. Ever since this COVID-19
pandemic has hit us, mortgage rates have
gone all over the place. Up, down, sideways, you name it. It’s tough to even talk to
people about mortgage rates, because they’re changing so much so fast. New programs are coming in and out, we’re gonna talk a little
bit more about that later on. As we’re chatting here,
I’m gonna scroll through some of the mortgage rates,
but what you’re seeing is all the big banks around 2.59%. The model lenders are
kickin’ around about 2.45%, and that is May 15 here, May long weekend. So there’s some great rates out there if you are in the market,
you are looking to buy, go talk to your bank or
mortgage broker right now and get on those great mortgage rates, get those locked in, ’cause
these are fantastic rates, gonna make those houses
even more affordable. Okay, bonus topic time,
and so what I wanna talk about here is some
of the new programs that are being put out by a
few of the different lenders. So these are cashback programs designed as allowing you to be able
to do small improvements or repairs on a house
when you’ve bought it. This is a little bit different than the Mortgage Plus
Improvements program you may be aware of. So that is, you’re buying
a house for say, $300,000, you end up extending that
mortgage to say, $325,000 in order to do some
renovations on the house. The problem with the Mortgage
Plus Improvements program is you have to have the money upfront to be able to do those repairs, and then it’s reimbursed. As well, if you sell the
house before the mortgage is paid out, they make you pay out that Mortgage Plus
Improvements right off the bat. But, these new cashback programs are structured a little bit differently. They’re not designed
for major renovations, they’re designed for smaller things like fixing an AC unit
that’s fallin’ apart, a furnace that’s on it’s last legs, and you can actually even use them as a little bit of a debt consolidation to pay down some credit
card debt, things like that. So what you can do is get
these cashback programs with their low interest rates, and they give you the money upfront. So if you have to replace that furnace, you can do that. A lot of first-time buyers who have really scraped together every
single dollar they’ve got in order just to have the down payment, cover legal fees, et
cetera, this is really good for those types of
buyers because I get it, you probably don’t have
a lot of extra cash, $5000 to fix a furnace kickin’ around. So a program like this is fantastic. It’s a lower interest
rate, and it’s prorated if you sell the house before you’ve got the mortgage paid out. So you’re not paying a substantial amount to get out of the house when you sell it. As well, unlike some of the
Mortgage Plus Improvements or some of the cashback
programs of years past, it actually isn’t gonna
cost you more money than the amount of money you’re borrowing. Some of those programs before,
if you were borrowing $5000, it might cost ya eight,
nine, $10,000 to borrow it. It really wasn’t a good
situation to be doin’ that. I understood if you had to
do it, you had to do it. These programs are a lot better. So if you’re in a position, especially as a first-time home buyer,
and you wanna get access to one of these programs,
talk to your mortgage broker or your lender, these
programs are really good, they’re gonna help you do
those small little repairs around the house when you’re buying it. So if this is your first time checkin’ out Bald Prairie Real Estate, thank you for stoppin’ by, I appreciate it. I hope I was able to
give you some information that you found valuable. If you wanna know more about, say, being a first-time home buyer, I’ve got a whole series of videos, I’m gonna have them right here, that go over first time home buyer topics. But if you just wanna know more about the real estate
market, what’s goin’ on, what’s the latest market stats, I’ve got my most recent video right here, you can check it out,
plus I’m gonna set it up as a playlist so you can go through and see where the real
estate market has been and how it’s progressing
forward through the years. Thanks a lot for watching guys, enjoy your long weekend.

14 thoughts on “CANADIAN REAL ESTATE MARKET IN CRISIS? | Mortgage rates and more

  1. With Canadian mortgage arrears rates on the rise and projected to double what they were during the 2008 crash, how much of an impact on prices do you expect to see?

  2. I looked into purchasing a property in Toronto last fall. It was dismal. Especially in the east end markets ie Clare-lea, Scarborough. Forget Don Mills.
    I tried to purchase a wreck of a semi at Steels and Don Mills Road at Christmas. The place was so bad I would not have been able to move my family in without extensive work. Ima Carpenter and have many trade friends so I was prepared to do that.
    6 offers, including my offer collapsed, how ever the trustee ( yes I said trustee) was able to sell for very near renovated market value.
    Boy am I glad I saved my money.
    I was sorry I had to back out of the Market at Christmas. It just looked like I was not going to even be able to buy a semi.
    We have enough cash on hand and the bank prequalified me for 750.
    Recently I saw a place right where We ( the family) wants to be and it meets all my wants.
    My dilemma is that savvy people including my lender ( major bank ) are telling me to wait. (And I will )
    How long I should wait and how low it will go are the biggest question now.
    The bank really likes me because I have a decent down payment 150.
    Any thoughts?

  3. You do a good job you know that but I think that the Gig is Up… I mean come on you have to admit this is not looking very Optimistic…

  4. Here is Reality in this Video… its called DELEVERAGING… Watch and Learn How The Economy Truly Works…

  5. It will definitely be an interesting few weeks as the spring weather comes in and gradually facilites and business in Canada will be opening up again. Even will all the numbers and statistics we have I feel like only time will tell what the market and demand for real estate in the coming months will do to the prices. Thank you for the update!!

  6. Its going down and this guy keeps saying its gonna go up. Like I said most agents will say buy when locusts eat grass on the green lawn. They full of it.

  7. Stock market is up and down. Housing? It will take a long long long time for housing to to adjust to our new economic reality. Sellers will have to adjust their expectations.

    Given high unemployment and lost incomes, the Bank of Canada will also continue to lower interest rates. Japan, for example, a 15 year fixed mortgage goes for .89% and a 5 year variable is at .45%.

    If you can wait till August 2021, you will have cheaper borrowing costs, and cheaper houses. Of course, every market will react differently, and I’m not familiar with Saskatchewan.

  8. I’ve noticed that most realtors think Canada won’t go through a housing correction. It will be interesting to see what happens in September when the deferrals end and the Feds stop spending like drunken sailors. I believe Canadians are far more indebted than the Americans were when they went through the crash in 2008.

  9. This idiot want to through people under the bus, market dropped 8% in one month, why buy now while you can get it a lot cheaper a year from now, interest rates will continue being low.

    Never trust news from real estate aging, they don’t know anything and they just want to make profit by doing nothing

  10. fuck canadian real estate!!! We build cheap crap that equates to slavery for its citizens!!! Reserves are more pleasant places than the cities. We have many options in canada, i'll be investing in private communities and peoples keeping as much labor and taxes from your govt as possible.

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