The fact that this current global situation has taken a great many would-be qualified homebuyers in Canada off that list doesn’t need a whole lot of explanation, and we have covered how the pandemic has put serious constraints on the real estate market in Canada. Of course, the one reality that’s shone through after these past 6+ months, however, is that supply and demand economics have done very well in preventing the real estate market from crashing like some prophesized it would.
That’s not to suggest this is good news entirely, as the way the market has kept itself somewhat insulated from the economic downfalls of the pandemic has continued to make home ownership out of reach for a lot of people. There’s some good news to counter that somewhat, but before we get to that one of the unfortunate realities of fewer qualified buyers is fewer newer clients for real estate agents. That can be very troubling, especially for a new realtor who’s looking to make a name for him or herself.
That’s why our online real estate lead generation system here at Real Estate Leads is such a great resource for realtors who’d like to take every advantage they can to ensure a continued slice of the pie. Both during these troubling times, and at any time really. It puts you more directly in touch with people who are genuinely considering making a move in the local real estate market, and if there’s a way for you to be in touch with them first… well, what’s not to like about that?
But back to topic. It may be perhaps in understanding of the need to keep the real estate market accessible for people that the BOC (Bank of Canada) has chose to keep interest rates low for the foreseeable future – at 2.5% to be exact, and this means that a good number more couples will find the idea of taking on a mortgage to be not quite so intimidating.
Good News: Borrowing Costs for Homes Staying Low
In announcing this news, the Bank stated “Monetary policy is working to support household spending and business investment by making borrowing more affordable,” and while that doesn’t refer to housing explicitly it’s fairly sure that allowing Canadians to both improve their housing and support an industry that’s very important to the country’s GDP have definitely factored into this.
Much of this will very likely predicated on the fact that household spending rebounded sharply over the summer, with stronger-than-expected goods consumption. Plus, we’ve seen what many economists specializing in real estate predicted – much of the large amount of housing activity seen since May or June was a reflection of pent-up demand.
This is big, because the Bank of Canada’s key rate influences interest rates for home mortgages, and then we’ve already seen them cut the key rate 3 times in March 2020 to keep the economy afloat when all of this craziness was new. From a rate of 1.75 percent at the start of that month, the central bank brought it down to 0.25 percent. That is the lowest level that can be set, and it’s quite telling that they’d be willing to do this at this time?
Is the solidity of the Real Estate Market an integral part of an economically healthy Canada? You bet it is, and while there’s both good and bad to that the fact of the matter we need a strong and vibrant market where homes retain value at the very least, and ideally increase in value for both owners and the civic interests that are served with property taxes.
Even Lower Rates?
Seems so. Just last week we saw lenders like CanWise Financial and MortagagePal.ca offering 5-year mortgages at 1.74%. And the bigger lenders were on board with this too – TD Bank had 1.99%, Scotiabank 2.09%.
We’ll conclude here by adding one little important fact. The BOC has stated that it will hold the policy interest rate at the effective lower bound until the economic slack is absorbed. That’s the way it should be, and it’s a very positive development for both the country as a whole and for people who want to buy a home and enter into the real estate market where they live.
Sign up for Real Estate Leads here and receive a monthly quota of qualified, online-generated buyer and / or seller leads that are delivered to you exclusively. No other realtor receives these leads, only you do, and they are for prospective buyers and sellers living in the area of the country where you are living too and working as a real estate agent. It’s an excellent way to get so much more out of your client generation efforts, and we find that most realtors quickly come to see it as a part of their marketing budget well spent.