Raoul’s Mortgage Thoughts – October 2024
In recent weeks, the federal government has frequently updated its default mortgage insurance rules. The latest changes, which include raising the maximum purchase price for an insured mortgage and extending the amortization period to 30 years for first-time buyers, are positive steps to help Canadians manage rising home-buying costs. However, many are still waiting for a price drop, which is unlikely to happen. A significant decrease in home prices could spell financial trouble for many modern homeowners. While tapping into home equity for investments can be beneficial or paying high-interest debt, it’s not advisable to cover daily expenses or indulge in a lifestyle beyond one’s financial means.
A new announcement allowing homeowners to refinance their homes to add an additional suite presents an intriguing opportunity. Previously, such refinances could not be insured or spread over a 25-year amortization period. This change could encourage homeowners to enhance their basement suite, generate rental income, or accommodate a family member while preserving separate living spaces.
As the year draws to a close, observing how the Bank of Canada responds to the latest inflation figures will be interesting. It’s widely anticipated that at least one rate drop will occur before 2025. The impact on the spring housing market remains uncertain, but lower interest rates may boost buyer confidence, encouraging more purchases. This increased buyer activity could entice some sellers to enter the market, potentially stabilizing any extreme price increases.
Finally, as a licensed mortgage broker, I emphasize the importance of viewing mortgages as a strategic tool rather than just a monthly obligation. Collaborating with trusted financial partners, including financial planners, accountants, and life insurance agents, is crucial. There are various strategies to accelerate mortgage repayment, saving you thousands in after-tax dollars. However, these strategies require the combined expertise of your entire financial team. Many Canadians face economic challenges and seek saving opportunities. Ironically, even though a mortgage is likely your largest expense, many overlook its potential power. Being in an unsuitable mortgage, even with the lowest rate, could ultimately cost you more than anticipated.
For more insights, click the link below to schedule an appointment with me.
See you next month!
Raoul Hunt
Mortgage Broker
DLC The Mortgage Source – Independently Owned & Operated – Licence # 10145
Ottawa: +1-613-218-8798
GTA: +1-647-297-8798
