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- Hey guys, Bradley tuning in,
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