Question and Answer Series
How should you get the most out of your relationship with your realtor?
Realtors work with lots of people simultaneously. They try to engage everybody while not coming off as being too aggressive. Buyers should not worry about being aggressive and proactive by asking lots of questions. You should follow up and be pointing out properties you are interested in, and this way, you will get a lot of good advice and the most out of the relationship. After all, most realtors don’t usually charge for a consulting fee or any fee on the buy side and you want to use and benefit from their expertise.
Should I buy a property right now?
The genius Investor thinks in the long term. People should think more about the long game when buying a property. The future is not predictable and it is difficult to buy and sell based on when the market will boom, crest or slow down. In general, this may not be the best time to buy thinking in the short-term. However, factors such as interest rate hikes and NDP policy shifts could change the current climate, and we might see fantastic buying opportunities in a few months, though this is also inherently unpredictable.
Can you guys share anything interesting you are seeing in the market currently?
Joyce-Collingwood is an area which seems undervalued. Built properties especially seem attractive considering that a developer’s project (The Joyce by Westbank) presold its homes for extremely high prices in comparison to existing homes on the market. Also in downtown Vancouver, the price gap between 1-bedroom homes and 2-bedroom homes is not wide enough. 2 bedroom homes are better value at the moment.
Ray Macklem, a mortgage specialist with Dominion Lending Centres, and also a Readers’ choice mortgage broker for the Peace Arch News shared some insights on the recently increased lending rates.
An update on lending rates
The Bank of Canada raised their prime lending rate by a quarter point, and most Banks followed suit and raised their prime lending rate by the same amount, passing it onto consumers. People holding variable rate mortgages, home equity or personal lines of credit will be affected. However, rates are not going to go through the roof anytime soon because the economy is strong and doing well. It should be noted that this is only a small increase and there won’t be issues where people will not being able to afford their mortgage payments.
How will this affect fixed rate VS variable rate financing?
The variable rate is historically better than fixed rates even factoring in the rate increase. The quarter point increase is about $13 per $100,000 of a mortgage. What that means is that if you have a $400,000 mortgage, we are looking at a $52 increase in your monthly payment for this quarter point. As a counter point, fixed rates went up when news filtered in that the Bank of Canada will make the increase which still makes variable rate a better option right now. However, it is likely that towards the end of October, there will be another quarter point rate increase.
Ease of getting mortgages
A mortgage broker and a traditional bank are the two ways to get mortgage financing. On the broker side of things, they have strict rules in place that have to be followed but can shop your file around to get you the best rate and product. A bank, on the other hand, is typically lending its own money and sometimes will give precedence to clients with whom they have existing relationships and can succeed in financing trickier, “outside of the box” mortgages.