Royal LePage is expecting potential reductions in the Bank of Canada’s interest rate to propel a 5.5% annual increase in the national aggregate home price during the final quarter of 2024.https://t.co/aryVtVk1KQ#mortgagenews #interestrates #housingmarket #houseprices
— Canadian Mortgage Professional Magazine (@CMPmagazine) January 4, 2024
Still, despite the prospect of rates coming down later in the year, Abrams said he would be surprised to see a big upsurge in Canadians choosing to refinance, except in specific circumstances.
“Where there could be a reason for refinancing is a lot of people made bad financial decisions in 2021 and 2022, and they took out a car lease that they can’t afford now. They took out loans that they can’t afford now. And they were floating rates,” he said. “They started to go up and those are folks that will [finance] at even 4.5% or 5% because it could help them pay off their other debts.
“But unlike in 2020, 2021, or early 2022, when rates were low and people were financing to upgrade their home, change their kitchen, or do whatever they wanted to do from a life perspective, I think with the rates where they are right now and people not yet feeling the full pain from the rate increases yet, I’m pretty bearish on the refinance market.”
Could some Canadians choose to sell second properties at renewal time?
On the renewal front, another trend to watch is Canadians who own investment properties and second homes who may prefer to sell their property rather than stomach the cost of a higher rate, according to Abrams.
“While they might qualify for the updated rate, they might look at it and say, ‘It might not make sense to carry this property anymore. Maybe it makes sense to sell it,’” he said.