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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