As the country continues to reel from the shock, disruption and trauma of the ongoing global pandemic, few could have imagined, let alone predict, that home prices would be setting records and mortgage growth would remain at a normal level as we enter 2021. However, it seems this much is true; here are a few mortgage predictions for the year ahead:
Rate hikes won’t happen…at least not until next year
With a vaccine-led comeback for Canada’s banks and mortgage lenders, economists are upping their rate hike estimates to 2022, instead of 2023. Rates are typically hiked by the Bank of Canada within a year or two of the overnight rate hitting rock bottom, and this time around, it’s doubtful things will be any different, and if you’ve got a variable mortgage, you probably won’t have to worry about rate hikes until next year.
Fixed rates may reign supreme
At the beginning of the new year, mortgage customers will save more money with variable rates than any other term, before they give way to fixed rates. Following government bond yields that reflect economic expectations for the next one to two years, and thanks to a number of factors, fixed mortgage ratesare predicted to be lifted at some point next year. With this in mind, fearful borrowers could see locking in their mortgage rates, as the only sensible option.
Less mortgages will be sold in-branch
While many of us may prefer face-to-face mortgage advice from a professional mortgage specialistinside a bank branch, the reality of the ongoing pandemic means that banks are forced to find new and safer ways to advise and deal with, their clients; ultimately, this will lead to less of a requirement for physical branches. With online mortgage interfaces improving with every passing week, more customers could begin to see mortgages as a commodity, and banks and other lenders will be forced to compete on interest rates.
An increase in non-prime mortgages
With Canadian incomes having shrunk disastrously throughout the health crisis (or disappeared altogether in some unfortunate cases), proving they have enough income to qualify for a mortgage will only get harder. The self-employed will find this even more of a problem, as they’re expected to show a two-year income track record. This means that the year 2021 will see more non-prime mortgages than ever before, although they will still be a market minority.
It may be true that every cloud has a silver lining, and in the case of mortgage borrowers, with the price of money at an all-time low and competition for mortgages at its fiercest, the dark clouds of the pandemic may part to illuminate a clear path to mortgage savings as we enter 2021.