Revisiting Fixed Vs. Variable Mortgages

It’s the classic rate decision many mortgage shoppers are faced with. And it’s only been made more complicated since the start of the pandemic. Towards the latter half of 2019, variable rates were flying off the shelves with rates as low as prime – 1%. A lot has changed since then.

In March, fears over the COVID-19 pandemic and the subsequent lockdown forced most banks and other mortgage lenders to cut their fixed rates from 3.95% to 2.45% within the span of just one month. At the same time, variable-rate discounts were scaled back to just prime – 0.15% to 0.25%. By the summer fixed rates were setting historic lows. That led to a dramatic shift in mortgage selection by borrowers.

Why the shift in mortgage preference?

First, the fixed rate mortgage is among the most competitive mortgage products on the market. And many believe variable rates have no more room to fall, given that the Bank of Canada’s overnight target rate is holding at 0.25%.

Second, homebuyers are attracted to the stability that fixed-rates offer. They can lock in a rock-bottom rate for five full years.

The outlook

The Bank of Canada, in its recent Monetary Policy Report, suggested that rates won’t be rising until at least 2023, which is when inflation is expected to return to full capacity. Some forecasters, such as those at TD Bank, don’t expect the first-rate hike until 2024.

With forecasts like that both variable and fixed could be good options.

If you are in the process of shopping for a mortgage and are undecided whether to take a fixed or variable rate, I can help you understand the pros and cons and offer personalized solutions.

If you need additional information on this topic, please feel free to reach out to me at 306.222.7900 or debm@mortgagegroup.com

With the cooler temperatures outside, you would normally expect to see the real estate market cool off...but that is not what we saw this past month.

In October we saw 430 home sales, which is a super high number for this time of year. This is actually the same number of sales we saw in September.

Historically at this time of year, things begin to wind down, social activities begin, and the market starts to cool off. For example, in October of 2019, we only saw 307 home sales. So that means for this October we are up 41.5% in homes sales compared to last year.

We commonly hear from clients that they think they should wait until spring to get their home on the market...but we want to show you why we think December is actually a great month to sell your home.

To prove our point, we wanted to collect some historical, end of the year data...and after digging around a bit, we found a trend that we had to share.

We went back a few years, and decided to look at sales to listings ratios. Sales to Listing Ratios measure supply and demand by simply dividing the number of sales by the number of new listings. It is a good indicator of the speed at which homes are selling.

In 2017, the sales to listing ratio for the year was 38.9%, but in the month of December the sales to listing ratio jumps to 63.8%.

In 2018, the ratio was 41.7% for the year, but 52.7% in December.

In 2019, the ratio for the year was 46.5%, but then 67.2% in December.

When you average out those 3 years, you have an average sales to listing ratio for the year of 42.4%, but in December the average is 61.2%.

This means, over the last three years, December has provided homeowners a 18.8% greater chance to sell their home compared to the rest of the year.

In 2020, COVID-19 may impact the sales to listing ratio even more, as we’ve already seen that October was a very strong month. We may find that December proves to be once again a stellar month, and it could be a great opportunity to sell your home.

If you have a home to sell, there is still time to get your home on the market to take advantage of the December upswing. If you have any questions about this, or specifically about your home, we would be happy to go over everything with you.

Thanks and have a great November!

It’s officially Autumn and the leaves are falling and the temperatures are dropping. You’re probably wondering what this change in season means for the Real Estate Market in Saskatoon? Is it still a good time to buy or sell your home?

We’re going to share what we think you need to know about the market going into the fall and winter season of 2020.

First, we will quickly review the stats that just came out for the month of September. As we predicted, they continue to trend upwards.

There were 430 sales last month, which is a high number for this time of year. That’s actually 40.7% more sales compared to September of 2019, and 12.2% more sales for the year compared to this time last year. Although you should note, that it’s still less sales than August, where we saw 461 sales. This shows that even though we are seeing a slight decrease in sales due to the fall season, which is typical, we are seeing a much stronger fall market than we did in 2019.

This is also evident when you look at new listings from September. There were 12.8% more new listings this September compared to September of 2019. This indicates to buyers that due to the strong market there are still new listings being posted and there will likely be more in the coming months.

There were 1483 total active listings as of the end of September. This is a much lower inventory than we would typically see in September, where we are normally closer to 2000 or so active listings. This low inventory indicates that we are still generally in a sellers market, especially in the 300K - 550K price range.

So after looking at all of these stats, you’re probably wondering if you should be considering selling your home in the fall or winter market. We want to share a couple reasons why we think selling in the fall and winter can be a great idea.

1) In fall and winter, the buyers that exist in the market tend to be more motivated than they might be in the spring and summer. The colder weather weeds out any maybe-buyers and instead brings in super serious clients who want to close on a property before spring.

We also think that this year will be a bit different than normal as people are unable to travel due to the pandemic. People might get a bit stir crazy, and start looking for a change of scenery in their home.

2) As the weather gets colder the inventory in the market continues to decrease.

Lower inventory = less competition for your listing

Those super serious buyers in the market will have fewer homes to compare against yours making your property more attractive.

In general, we believe that regardless of the season, if your home is priced appropriately and in good condition, interested buyers and potential offers can be expected.

If you’re interested in getting more information, or would like us to provide you with a free evaluation of your home, please contact us and we would be happy to help.

We wanted to share one more piece of good news!

In September, 23% of all real estate transactions in Saskatoon were done by Realty Executives agents. This makes Realty Executives Saskatoon the #1 brokerage in the city! 

We are so proud to be a part of this amazing team, and we want to give a big shout out to Wayne Zuk, our broker/owner who is always there for advice and encouragement and who is one of the main reasons our team is so successful!

We hope you all enjoy your long weekend and have a wonderful Thanksgiving! Stay safe and see you soon!