Mortgage rates and property prices are falling! For now

Mortgage rates and property prices are falling! For now

Happy New Year! I come bearing wonderful news. Fixed mortgage rates have been on a downward trajectory since October and will continue to decline for years to come. The Bank of Canada has indicated they are no longer increasing and should start dropping the overnight lending rate within 2 to 3 months.

The 5-year bond yield which dictates fixed mortgage rates has been dropping fast since October. Want to predict the future? Well, sort of, just want the bond yield to see where fixed mortgage rates are going in the next one to three weeks. Why such a range? If the bond yield goes up, mortgage lenders are quick to increase rates, and do it, usually within a week. When the bond yield drops, lenders take their sweet time and can take up to three weeks to drop rates. No comment.

The Bank of Canada is predicted to start cutting rates as early as March, but more realistically in April. They will continue this trend for years to come. The biggest driving factor in the delay of the the Bank of Canada cutting rates is reckless government spending & printing money causing inflation. Yes, you 100% have your government to thank for this mess, which has caused the financial strain for all Canadians.

We’re in an interesting situation now, because even though fixed rates are dropping, prices are as well, which was not expected. Yes, we are in the winter time which is generally the best time to buy in the worst time to sell, but still, the market has been extremely slow for sales for a while now, so it was widely expected when the rates come down that things would get very busy. It is just a matter of time before things get crazy again. Expect bidding wars as early as spring time. 

Are we going to have a recession in 2024? That is my prediction but I don’t think it’s going to have much, if any, effect on real estate. 

Surprisingly, even with the crazy high inflation and overall cost-of-living paired with high mortgage rates, the greater Vancouver real estate market still went up 5% in 2023. With so many buyers remaining on the fence and waiting for rates to come down, we are anticipating one heck of a run starting soon. With the average property price expected to double, again within seven years (see HERE), buying in the next 3 to 6 months is highly recommended. You will thank yourself later!

Metro Vancouver’s housing market closed out 2023 with balanced market conditions, but the year-end totals mask a story of surprising resilience in the face of the highest borrowing costs seen in over a decade. Residential sales were down 10.3% versus 2022 and they were down 41.5% compared to 2021. Looking at a 10 year sales average, sales in 2023 were down 23.4%. Would you like to see a detailed report on Greater/Metro Vancouver? Click HERE.

Why haven’t prices tanked in such a brutal economy and conditions? Well, we’re barely above 4 months of inventory nationally, which is lower than at any point from 2010 to 2020. Population growth is immense and new supply is constrained. Economics 101, supply and demand, my friends.

P.S. DO NOT FORGET to payback your entire CEBA Covid loan before Jan 18th you could lose $20,000. More details HERE.
Best wishes,

Realtor & Mortgage Broker in Greater / Metro Vancouver.