coming at you with another video.

There's a lot of news talking about interest rates,

there's been a lot of confusion

as to what we think is gonna happen with interest rates,

and so I wanted to create this video for you

to really summarize what you can expect to see

at the second half of 2019 into 2020

as far as what's gonna happen with interest rates

and what that means for you qualifying for a home.

But before I get started, my name is Bradley.

We do videos like this every week

to keep you updated in the latest tips and tricks

here in the Toronto real estate market.

I'm so excited to bring this content to you.

I wanted to create this video because I've had

a number of you asking me to go back to the good old days

when I would share information on Toronto real estate market

and so that's what I wanted to do,

I wanna continue to hit you with

amazing content related to our local real estate market here

because that's what we do best,

that's what our followers are looking for,

and I think this is a great place to start.

Talking about interest rates and

what my predictions will be for this year.

What do we know lately that has

happened as far as mortgages?

There's been a number of changes that would

affect the way you would qualify

before we get into the specific numbers on interest rate.

Recently, the central bank reduced its

benchmark qualifying rate from 5.34 to 5.19.

Now this marks the first time they've

lowered this number since September of 2016.

Now, if you're like me you're probably thinking,

well whoop dee doo, that doesn't

change a whole lot, and you're right.

In fact, you'd only qualify for an extra 1.4% of your home.

So you're gonna get a little bit more money,

but what I find fascinating is this trend,

this movement that where we've been

climbing this qualifying rate but now,

all of a sudden, there's a shift

where it's starting to come back down.

Now, I wanna ask you, do you guys think that this

trend, this change in the way that we're

qualifying buyers, first time buyers or otherwise,

do you think that this is gonna continue

or do you think this is just a one off way of saying,

you know what, we're gonna stop here?

Now, what is most fascinating to me on this subject

was recently the CEO of the Ontario Real Estate Association,

a man by the name of Tim Hudak,

and if you follow politics you would know that name,

has recently put forward for federal

policy makers some suggested changes.

Now, why I find this so fascinating

is it really reminds me, it's almost a trigger

back from 2017, back when the market was superheated

and there were all these recommendations coming

and what the government should do to try and help it out.

In this case, it seems to be going the opposite way,

we're trying to help buyers now get the market moving again,

but it just really reminds me of those days

and that was one of the triggers,

if you remember back then, that was one of the

triggers for me that flagged that the

market was going to turn back the other way,

that there was a potential for a drop

as this foreign buyer tax came in.

But what exactly is he recommending?

There's three things.

The number one recommendation is to ease up

on this stress test which is what we actually just saw.

So, this is evidence that they are listening

to the consumer, they're listening

to the real estate associations.

The other side is, when it comes to renewals

which is also a big part of the platforms

in this new political race that's

coming up next year with our elections,

is this idea of removing the stress test

for people who are moving from one lender to another.

There's no sense in qualifying over and over again,

and in many cases, the banks are taking

the opportunity to gouge their rates.

And another angle, which I find very fascinating,

is the request for 30 year mortgages

which would mean lower borrowing cost

but spread it over a longer period of time,

which would have its own unique challenges

and maybe we'll talk about it in the future.

So, that's what we've seen as far as mortgage guidelines go

but when we're talking about interest rates,

you can't jump into what we're doing

until you look at what the United States is doing,

and it's such an interesting world down there.

The news articles that are flying by me

talking about the president and the way that he's

talking with their central bank

and this, kind of, battle, this feud between

whether they should reverse the way

that interest rates have been changing.

But even now, we find the central bank is agreeing

in that, they're talking about

reducing their interest rates and having this plan

to have it sort of slowly come backwards.

In fact, I'm gonna read you a quote

that comes out of the decisions that they're making

at their central bank and they say this,

"uncertainties around trade tension

and concerns about the strength of the global economy

continue to weigh on the US economic outlook."

They also go on to say that "the business

investment growth has slowed notably."

So, they're starting to say, you know what,

maybe there is a need for us to reduce these rates

and so they've turned direction,

but we don't really see Canada necessarily following suit

which we'll get into in just a second.

But I would suggest, as far as USA goes,

you can expect to see them do a rate drop,

maybe two rate drops, before the end of 2019.

Now, I wanna turn to our beautiful country, Canada.

Now, we know what the US is doing,

we know what some of the guidelines have done

to make mortgages easier and what

kinda trajectory they're on, but let's

listen from the Bank of Canada

what they have to say about our interest rates.

So, the Bank of Canada said, "recent data shows

that the Canadian economy is returning to

potential growth," but then they go on to say,

so that's the good, there's a lot of

growth happening in our country

but on the other side it says this,

"however, the outlook is clouded

by persistent trade tensions."

We've just heard that in the announcement from the US.

So, there is this overarching cloud that sits above us

that there is international tension

that is really hindering these guys

from continuing to grow their interest rates

even in a place like Canada where there is

great jobs, oil is doing very well,

and these are some of the other contributing factors,

but because of the geopolitical tensions

and these feuds going on around the world,

we're left thinking, you know what,

maybe we're better to stay put.

Now, if you want more fun information on this,

I'm actually gonna be creating a video

talking about some of the risks,

the biggest risks I think that are facing the GTA

and our real estate market in the coming years.

I'm gonna post that in the next few weeks

so make sure you check that one out as well.

So, ultimately, when we look at what Canada's doing

we have this giant scale, you know?

We have the side where there is just

great output of jobs and production

and we're doing really well, in fact, our Canadian dollar

is going up which has its own challenges as well,

but on the flip side we have this challenge,

this equal balance of trade uncertainty and tension

and because of this, recently Canada has

held their rates the same despite this

awareness that the US is intending to drop theirs.

Now, the question is, is that gonna continue?

And from my perspective, in my opinion

and based on my predictions, which is

the point of this video, I anticipate

that our rates are gonna look very similar

to how they do now for the next

six months, at least, maybe going into 2020.

If there is any changes whatsoever,

you can expect that it would actually be

a decrease, again, contributing back from

the fact that the Canadian dollar is doing so well,

it actually harms us when it comes to trade.

But where is there an opportunity on all of this?

Well, you could immediately identify

that this is a great variable mortgage environment.

This is a place where you wanna have variable mortgage.

Now, I personally, I'm gonna own my own home

which I'm sitting in right now,

got a variable mortgage not that long ago,

and I think a lot of it was coming from

seeing this writing on the wall.

We are practicing what we preach.

But at the same time, there's also

great deals right now on fixed rate mortgages,

and in some cases, they're actually

cheaper than variable mortgages.

So, this is an opportunity for those of you

who are looking to invest, but ultimately

having a stable interest rate is actually great.

The stability is awesome when it comes to

growing real estate, and it's a very

healthy thing to have and so, this is good news.

This combined with, here in Toronto,

this removal or the watering down of this stress test,

and also at a supply issue, which I will also be doing

a video on in the coming weeks because this is, I think,

the single biggest red flag that's in my eyes.

It's just flashing and I don't think

anyone's paying attention to it so I wanna

share that with you coming up so make sure you

follow us on Watson Estates for that type of content.

But all of these things are pointing to

an appreciation in price, a growth

in the local Toronto real estate market,

and these are overall great things.

It's great for our country, and if you're looking to invest

and you wanna qualify for a mortgage,

there's some serious opportunities for you

that maybe haven't existed for a little while.

I'm gonna leave it with you guys.

What do you think is gonna happen in 2019 and 2020

as far as our global economy goes, as far as interest rates?

Share those down in the comments below.

Make sure you share this and hit that thumbs up

and the bell for notifications,

however we can stay in contact with you.

I'll see you next time, take care and keep it real.