Before I get into the topic of new home financing, I want to share some positive news! The Ontario housing market is definitely alive and well! I’m seeing new properties come to market and disappear within weeks or even days. Multiple offers are also a reality, once again. Watch for encouraging sales stats to be reported next month.
Buying a resale home
Buying resale is great because you can see what you’re getting and you can have it now (average closing is 45 to 90 days). You can also set and hold your mortgage rate now.
But, there are also some negatives to buying a resale. For one, you’ll never get 100% of what you want. Maybe the kitchen, master bedroom or backyard could be bigger or perhaps you’d prefer a different floorplan. The truth is, you’re buying someone else’s home that wasn’t designed for you.
But, hey, that’s life and you can’t have everything you want. At least, not yet… or maybe you can?
Construction financing as low as prime minus 0…
When it comes to selling your home, you have to spend money to make money. Land transfer taxes. Lawyer fees. Mortgage discharge costs. But your biggest cost? Likely your real estate agent’s commission.
It’s been said that Canadian sellers typically pay between three and seven percent of their home’s selling price to their real estate agent, which is then split with the buyer’s agent – sometimes evenly, sometimes not. And commission adds up, especially in the nation’s hottest markets. Though analysts are seeing some slowing in housing markets across the country (especially since 2017), the average selling price of a home in Toronto came in at $820,148 last month. That can add up to a lot in commission.
Commission rates in Canada
There is no set rate of commission for real estate agents in Canada or in the individual provinces and territories.
In fact, according to Canada’s Competition Act, to promote free and open competition, commission rates are based on whatever that specific agent wants to charge, and realtors cannot claim that there is a standard rate across the board…
We’ve seen mortgage rates drop steadily over the past three months. At the beginning of this year, we saw fixed rates approaching 4%. And, today, we’re seeing them sit around 3%.
WARNING: These rate wars could come to an end as recent employment figures skyrocketed all estimates… stay tuned!
This is like the perfect storm. Fewer mortgage transactions across Canada + Declining investor confidence + Inverted bond yield curve. Put it all together and you get a rate war. And for a refreshing change, consumers aren’t the victims. The banks are settling for a smaller profit margin.
Now, don’t get me wrong, it’s not like the banks are your friends and just decided to cut their rates as a good deed. They really don’t want to give you lower rates. Not a chance. It’s about market share. They must lend money out in order to offset their deposit costs that they pay to customers with savings accounts.
Close mortgage rate spreads
Earlier this year, both Canada and the US experienced an inverted yield curve…