• Yes, Mortgage Fundamentals Are Distorting the Hamilton Housing Market

    Affordability is a major reason the housing market in Hamilton is so slow. Below, we describe why key fundamentals are making things quite difficult in terms of value and expense.

    Mortgage Interest Rates

    On the surface, mortgage rates between 5% and 6% seem very normal. However, when prices are so high and a stress test requires approval at 7% or 8%, the situation becomes challenging. The Bank of Montreal released a study earlier this year showing that 72% of Canadians are waiting for rates to fall. This high percentage of potential buyers is also influenced by the state of the economy and the high cost of ownership.

    This interest rate phenomenon will also impact existing mortgage holders in Hamilton. By 2025, over 3 million home buyers will be renewing their mortgages. Those currently struggling will be greatly affected by these mortgage payment increases. In our opinion, cracks are beginning to show.

    Down Payments

    Down payments are another area of stress for potential homebuyers in Hamilton. According to CMHC, it takes approximately 4.2 years to save for a home. In cities like Toronto or Vancouver, this jumps to 10 years. Given the escalation of home prices, this is not difficult to understand. Most importantly, incomes from wages have not kept pace. As a result, today’s young adults are staying home with their parents much longer in order to save for a house.

    Income

    With higher home prices, higher incomes are required. For example, a single buyer making $100,000 can only afford a mortgage of approximately $390,000. In Hamilton, you need a large down payment. Without a substantial deposit, the quality of the home you can afford will be limited. Incomes do not stretch as they used to, and with increases in taxes, food, fuel, and general living costs, it is not easy. In most cases, two borrowers are now necessary for approval.

    It is a perfect storm for potential and existing mortgage holders in Hamilton. Stagnating incomes and today’s local home prices are causing a wait-and-see approach to market movement. We predict that either mortgage rates or home prices must decrease. We continue to hold this belief.

    Finding a Mortgage Broker in Hamilton

    Navigating these challenges can be difficult without professional help. If you’re searching for a mortgage broker in Hamilton, it’s important to find someone who understands these market dynamics and can help you find the best mortgage rates and terms. A local mortgage broker will have specific insights into the Hamilton housing market and can provide personalized advice to help you achieve your homeownership goals.

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