Calgary Real Estate Blog

Thanks to the busier than expected real estate market this year, CMHC – the government-backed outfit that offers insurance against mortgages when down payments of less than 20 percent are made – has already reached three-quarters of its cap for the year. The government had allowed for up to $85 billion in mortgage-backed securities to be issued in 2013, and we’ve already hit nearly $64 billion.

What does this mean? Well, the government will want to cool down the market a bit by implementing new rules that make it more difficult to qualify for a mortgage. Further, fixed rates on mortgages will likely be going up, with jumps of between 0.2 percent and 0.65 percent by the fall.

It’s going to become harder to be a pre-approved buyer, which means those who have pre-approval will become highly valued by sellers. Really, that’s one of the first things you should do if you’re entering the real estate market: get pre-approved, so you know what you’re working with and the seller knows you’re serious.

None of this is especially surprising or dire, but it’s well worth being aware of. As more develops, I’ll keep you posted

According to a just-released Harris/Decima poll, 47 percent of Albertans would take a fixed-rate mortgage if they were applying for one today, as opposed to just 26 percent preferring the variable-rate alternative. That’s pretty close to the national number – 45 percent favouring fixed – and not really that surprising. People tend to like predictability, and are often willing to spend a bit more to get it; the popularity of gas and electricity contracts, in a time when both are pretty inexpensive, is another example of this.

There are plenty of reasons to go fixed, and plenty to go variable. The Globe and Mail reported in December that variable-rate mortgages have been cheaper than their fixed counterparts some 90 percent of the time over the past 25 years, meaning those who rode out market fluctuations came out significantly ahead. On the other hand, right now fixed-rate mortgages are being offered for within one percent of variable rates, meaning the premium paid for stability is lower than it has been in the past.

Ultimately, buyers must make their own decisions based on their immediate circumstances, plans for the future, and tolerance for risk. I know some great experts that can help sort through the choices, and am happy to refer my clients to them, but a hard look at one’s own financial goals is key to setting up a mortgage that won’t lead to any lost sleep.