We are currently experiencing a large spike in conversations with clients and referral sources about mortgages, and there are several reasons why. Here are some of the main drivers of this trend:
Home values in certain markets are down: Although rates may be higher, clients are buying homes for less, which has led to an arbitrage opportunity in the market. This, in turn, has caused many people to explore their mortgage options and seek advice from industry experts.
Renewals: With higher rates, there is a growing differential between lenders, leading to more conversations around renewals and refinancing. Clients are eager to find the best deals and secure favourable terms for their mortgages. The advise component come renewal has never been more important.
Problem-solving: As rates continue to rise, some homeowners are facing financial difficulties. However, with the help of creative solutions and experienced lenders, we can often find ways to solve these problems and provide relief to our clients. Extending amortizations, refinance out equity, changing lenders and reducing rates, interest only payments to name a few.
Variable rate conversions to fixed: Fixed rates have been under 5% on 3 through 5 year terms, which has made it a great time to convert variable rate mortgages to fixed ones. Variable clients that are sitting around prime min 1% or less, creating a MIN 70bps in savings. This has led to many conversations with clients who are looking to save money and reduce risk. We are reducing interest rates, paying down more principal and creating cash flow.
Spring market: With the arrival of spring & with Canadian's wanting to be home owners and not renters in a very expensive rental market, clients are feeling more comfortable with rates and home values, and are eager to get pre-approved and start house hunting. This has led to a surge in conversations about mortgages as people explore their options and plan for the future and a huge increase in pre approvals.
Flattening and decrease in rates: Recently, we have seen a flattening and even a decrease in rates, which has led to even more conversations around mortgages. Clients are eager to take advantage of these favorable conditions and secure the best possible deals. They feel more comfortable with economists communicating a trend in the cooling off of increasing interest rates to combat inflation.
Overall, there are many factors driving the surge in mortgage conversations. Whether you are a homeowner or a potential buyer, now is a great time to explore your options and find the best mortgage solutions for your needs. By working with a trusted brokerage, you can navigate the complexities of the mortgage market and find the best deals and solutions for your unique situation.