Navigating the Mortgage Landscape: Key Insights for Realtors
This week has brought significant developments in the mortgage sector that are crucial for both realtors and their clients. Let’s dive into the latest news and trends that could impact your real estate transactions.
Inflation and Interest Rates
First off, the Bank of Canada (BOC) has successfully brought inflation down to its target of 2% as of August. This marks the slowest growth pace since February 2021, but it’s important to remember that inflation is measured year-on-year, meaning many goods and services remain expensive.
The BOC began its aggressive rate hikes in April 2022 to tackle the rising inflation. We’re seeing similar trends south of the border, where the Federal Reserve recently made its first rate cut since March 2020, reducing rates by a larger-than-expected half a percent. This adjustment reflects a broader effort to reign in inflation.
Rate Drops and Competitive Lending
In response to these developments, fixed mortgage rates have been decreasing over the past few months, particularly following the recent inflation and rate cut news. This has sparked a competitive rate battle among lenders, which is fantastic news for borrowers seeking the best deals.
The Broker Advantage
As brokers, our commitment lies in securing lower rates for our clients. It’s essential to understand the distinction between our fiduciary duty to our clients and that of banks, which primarily serve their shareholders.
Consider this scenario: a buyer has an accepted offer, locks in a mortgage rate, and then removes subjects while waiting for the file to close—typically a two-month process. During this time, banks rarely offer clients a lower rate. If clients push back, they may receive a marginally better rate, but it’s not in the bank’s interest to provide the best possible deal.
In contrast, as brokers, we are dedicated to monitoring rates daily and negotiating with lenders on behalf of our clients. If a client approaches me with a competitive rate, I’m willing to offer support throughout the rescission and subject removal process. My responsiveness far exceeds what a bank can provide, and I encourage clients to stay with me if I can beat the bank's rate before completion. This approach has resulted in a high retention rate among my clients.
Stay Connected
I’m always available to discuss anything related to mortgages or rates. If you find yourself in a situation where a client has questions you can’t answer, don’t hesitate to contact me. I’m here to help and can often provide answers in real-time.
If you have any questions please feel free to reach out.