New home buyers and real estate investors across Canada are celebrating the news that the 5-year fixed mortgage rate has fallen at the onset of 2019. This was an unexpected surprise given that the Bank of Canada was expected to increase their interest rates, but a fall in the bond yield (directionally tied to fixed mortgage rate movement) at the end of 2018 and a slowing economy across the country had the Bank of Canada hold interest rates steady. RBC was the first to drop their 5-year fixed mortgage rate and like dominoes big banks followed, as last week BMO and TD did the same, with more to come. And while the aforementioned new home buyers and real estate investors in Canada and Manitoba alike are feeling positive about the whole thing, owners of old homes in non-gentrified Winnipeg communities are not, and are worried about their ability to sell their property. Here’s why.
3 Things Owners of Old Winnipeg Homes Need to Know About Changes to the Fixed Mortgage Rate, and What’s to Come
1. Buyers Can Now Afford to Be Picky
The drop in the 5-year fixed rate gives buyers more options. Back in December they may have considered picking up your fixer-upper but now they are looking in other directions, towards houses that don’t need some serious TLC to be livable, as they see it. Look at it this way, if you’ve been trying to sell your old home for the past year (or longer) and had no luck then 2019 is not going to get any easier. In fact, 2020 and beyond are expected to be somewhat the same. Keep reading.
2. The Manitoba Mortgage Rate Forecast Calls for More of the Same
In the introduction we addressed how the Bank of Canada went against the pattern of the last year and held interest rates steady, thanks to the slowing economy. The Bank does this in an effort to put the economy back on track, hoping to encourage spending and investment across numerous industries, especially real estate. Since the economy will not simply bounce back into position overnight, neither will the prime interest rate. This means that in addition to the favorable 5-year fixed mortgage rate, the variable rate (which is directly tied to the Bank of Canada interest rate) will be expected to fall after a brief increase at the onset of 2019.
When you consider the increased new residential construction (and thus supply) from 2017-18 and the 2019 mortgage rate trends, those holding onto older and run down properties will have little opportunity to sell at market value. But fret not, because all is not lost. Keep reading.
3. Get Cash for Your House at Market Value for Other Opportunities
Since the Manitoba mortgage rate forecast spells trouble for the demand for fixer-uppers, you need to find a more “creative way” to sell your house, and fast before that market value drops further. This is where our cash-for-homes system comes to the rescue. We buy houses for cash, at market value, and will often close the sale within the week if that works for you. Yes, it can happen that quickly, freeing up funds for other opportunities and investments.
Another positive in unloading your old home for cash and fast, is that you too can use the drop in the fixed mortgage rate to your favor. By getting cash in hand today, you have an instant downpayment to apply to a Manitoba property that makes more sense for you. For instance, with a current (but definitely not perpetual) surplus of condominium developments all over Winnipeg you can take the cash from your old house sale and use the downpayment to score an impeccable yet affordable condo, locking into a fixed mortgage rate now while it’s low. Just like that your quality of life can change as fast as mortgage rate forecasts. The only difference, is that with the downpayment and locked rate out of the way, your forecast will stick.
Coming out of everything above comes down to quick action on your part, because we’re here to do the same on our end. All you need to do is give us a call at 204.222.0022 for a friendly noncommittal conversation to find out what we can do for you.