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Raoul’s Mortgage Thoughts – July 2024


With the summer in full swing, we haven’t seen the increase in home sales that many predicted.  Places like Toronto were down over 16% in comparison to 2023, while Ottawa managed to outperform 2023 by .1%. While the Bank of Canada’s rate reduction in June did spark some optimism, most people are remaining on the sidelines, waiting to see if it continues. The interesting part is that home prices are expected to rise as rates come down. When you factor in the amount of appreciation, it is, in most cases, better to buy at a lower price with a higher interest rate than at a higher price with a lower interest rate. 

One of the emerging trends in the real estate market is the introduction of shared ownership programs. These programs, which I like to call the ‘Bank of Mom and Dad’ for those without that option, create an opportunity for homeownership. They allow individuals with a small down payment to increase that down payment without taking on any additional debts, increasing their chances of a mortgage approval. The trade-off is that you are giving up a percentage of the equity in your home as it appreciates, but the potential benefits are significant. It’s important to know that these programs generally only operate in major cities,  so if you’re looking for something in a smaller city or town, these programs would unlikely fit you.

Additionally, more people are now using borrowed down payments to facilitate their entry into the market. We are seeing this more with people with a relatively high combined income who Do not have a down payment saved. Typically, I see this with folks who have focused on paying off their student loans and didn’t focus on saving for their first home. Qualifying for these can be tricky, as you have to be able to show you can afford to pay for your housing expenses and pay back the down payment. However, it should be noted that if you borrowed your down payment, you put yourself at a higher financial risk,  as a change in the market can quickly lead to you owing more on your home than it’s worth. 

Until next month, 

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Raoul Hunt

Mortgage Broker

DLC The Mortgage Source – Independently Owned & Operated – Licence # 10145

Ottawa: +1-613-218-8798

GTA: +1-647-297-8798