It’s All About Inflation
Everyone at this point has heard about the rising costs of goods and services including the rise in mortgage and interest rates. And it’s just not a Canada thing. We have not been threatened by inflation in many decades, and for many young adults, this is all a new world. Governments have been obsessed with controlling inflation because it can be very destructive.
Mortgage rates have nearly doubled since last year. This is an alarming increase in such a short period of time. It’s very hard to predict what the lending environment will be next year or five years from now, but this inflationary pressure may stay around longer than we hope.
Everyone’s situation is different and there is no one answer for everyone. Here are some of my recommendations:
Mortgage lending:
Consider the mortgage features as much as the rate. Flexibility to stagger terms, pre-payment privileges and other such features like convertibility options become very important.
Consider other fixed terms rather than the popular 5-year term.
Take advantage of b-weekly payments and other pre-payment privileges. Little things can make a huge difference in paying down your balance.
Consider mainstream lenders such as a major Financial Institution. Often, they are in a better position to help clients when needed.
Do not carry credit card or expensive debt. Convert these debts into your mortgage now while home prices are high and before it becomes harder to qualify.
Real Estate:
If possible, delay listing your home to sell. Sales have dropped significantly over the past few months and prices, as much as they lag; have already begun to soften.
If you must list your home for sale do so with a solid plan and strategy and make sure it’s followed. Consider what other homes you may be competing with in your neighborhood.
A great visual appearance has always been important, but it’s even more so now. And not just inside of the home. The outside appearance your home is the first impression for a buyer when they visit.
Buyers should take advantage of softening conditions and jump into the market. When the market softens, it’s common to believe it’s going to soften forever but history tells us differently.
Offers no longer need to be ‘condition free’ and buyers can spend more time on due diligence and satisfying their purchasing decision. Remember, don’t wait to buy real estate, but buy and wait.
Many households will be challenged during these Inflationary periods.
“Control your expenses and prioritize improving your savings. Have confidence in our Real Estate market but be cautious.”