Why Today’s Mortgage Trends Could Affect Realtors

In my 30 years in the mortgage business, I have never seen the proverbial roller coaster ride like I have seen in the real estate and mortgage markets of this year. Sean and I have decided to share our viewpoints and the current trends prevailing. Some are obvious, some not so much. We hope it helps!

Five biggest trends as of June 2022:

1. Buying first, selling second is done. Unfortunately, we had two couples who bought first, but did not sell at the price they expected. One couple expected $1.5 million and finally sold at $1.29 million. Their anxiety and stress levels skyrocketed. It is safe to say distressed sales will continue in the short term.
2. Appraisals are a wildcard. In our Mortgage Architects office, three of the last five appraisals have come in lower than expected. Some advice: As soon as your clients buy, please have the broker or lender order the appraisal immediately.
3. Pre-qualifying buyers has never been so important. Many clients were preapproved months ago when rates were lower. Today, with mortgage rates escalating, potential buyers are being approved much lower. There is a fallacy that since the stress test is still 5.25%, they are OK. Not true. With five year insured rates at 4.84, clients need to be approved at 2% above that rate, or 6.84%! It makes a difference in a large way as to affordability. Advice: please ask your specific buyers when their current preapproval will expire.
4. Many purchasers are refusing to close. One lawyer in Toronto has 20 files where the purchasers breached their contract. We have similar stories in Hamilton and it’s a trend to keep an eye on.
5. Divorcing couples cannot afford the mortgages on their own. Many couples considering separating or finding between high house prices and high mortgage rates that they cannot afford to go anywhere local.

As realtors, you are witnessing areas that we do not see in the financial space. Kindly share any trends as we want to be at the forefront of the market.