As mortgage rates tick higher, it’s easy to look at this simple trend and see the entire mortgage industry like that. Homebuyers who are searching for affordable financing look at mortgage rates, wanting the lowest rate possible. When you dig underneath the current home mortgage rate, however, you see many positive and negative trends that ultimately make up that number.
Are looking for the best residential mortgage? Do you want to know when the right time is to make your next real estate purchase? Check out these current home mortgage rate trends around the world.
Mortgage Remains Tough to Secure
For the reasons we are about to mention and others, homeowners still face exorbitantly high mortgage rates. This includes an inability to renew their mortgage because of high-interest rates and a range of issues based on current mortgage rates.
Mortgage Rates Aren’t Likely to Decrease
Mortgage rates are unlikely to go down in any sort of significant or meaningful way in the near future. For prospective homeowners or individuals looking to secure a new mortgage within the next two years, waiting for a better moment is probably not going to be found.
Inventory in Real Estate Is Increasing
Current home mortgage rates result in fewer real estate purchases. Though this isn’t economically positive news, it does benefit homebuyers, as inventory is increasing. This, in turn, helps stabilize home prices and provides a more competitive environment for offers.
Many Young Homebuyers Request Help From Family
In response to tight mortgage terms and rates, more young homebuyers are relying on family money to attain homeownership. As many as 36% and possibly more of buyers in the GenZ and millennial category count on financial support from relatives to afford their initial down payment.
More Cities with Million-Dollar Properties
Home prices are still rising steadily. This results in more million-dollar properties coming up all over Canada, from east to west, and in all sorts of cities. Million-dollar home values equate to a higher down payment and fewer homebuyers overall meeting the minimums required to qualify for a mortgage.
Short-Term Fixed Rate Mortgages Gain Popularity
A fixed-rate mortgage offers stable interest rates. More homebuyers are leaning towards short-term fixed-rate mortgages of 5 years or less because of the lack of surprise. They know what their monthly mortgage payments will be and don’t have to worry about interest rates rising or maintaining until renewal.
Uptick in Mortgage Refinancing Requests
Last year, 17% of homeowners sought mortgage refinancing. They want to change the terms of their loan and/or tap into some of their home equity to make life a bit easier.
Inflation Is Slowing But Has Not Found Stability
Inflation so far this year is below experts’ predictions. That said, inflation rates still lack stability. The result is rate hikes that have yet to ease and mortgage rates that have not yet come down. When interest rates will be cut remains a mystery.
The Bank of Canada Remains Important
The Bank of Canada has made several statements aiming to reduce inflation to 2%. In 2023, annual inflation was 3.9%, and in 2022, it was 6.8%. With this in mind, mortgage rates are expected to remain where they are and not be lowered within the next twelve months until inflation rates hit this expectation by the Bank.
Alternative Lenders Are Coming Up On the Rise
As mortgage rates are higher than they have been for some time, this has spurred alternative lenders and credit unions offering mortgages to come into the market. They attempt to provide better rates than the big six banks in Canada.
More Private Mortgage Lenders Are Also Emerging
Provinces with higher-than-average mortgage rates, such as Ontario, are seeing a greater percentage of private mortgages come to the forefront. More private mortgage lenders are arriving alongside other mortgage lenders to carve out a percentage of the market for themselves.
Many Interested Non-Homeowners Exist
There is a strong demand for home ownership from non-homeowners, calculated at between 65-and 75% of individuals, depending on the province. Many surveys suggest this interest is increasing due to real estate’s impressive returns as an investment vehicle.
Spring Remains the Best Time to Secure a Mortgage Rate
Mortgages peak in the spring. March, April, and May are the busiest months to secure a mortgage. The best mortgage rates are often found during this time when the competition is the fiercest.
More Homeowners Are Considering Selling
Due to mortgage rates being what they are and interest rates continuing to rise, up to 21% of homeowners are considering selling shortly. Many of these are young homeowners, and many are locked into variable-rate mortgages that can no longer afford their residence.
