I had some great feedback on the blog a few weeks ago, and about 150 signups to mortgage memo. I’m not signing everyone up to mortgage memo, only those who ask. This blog only goes out once every two to three weeks, while mortgage memo is more frequent (aiming for 2X per week). Mortgage memo features current mortgage rates, mortgage product information and case studies, and yes, more news and opinion.
In case you missed them, here are the links to the two last mortgage memos: MM – Thursday Jan 30th and MM – Friday February 14th
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This is a pretty important headline from Thursday morning, which could have an impact on our borrowing rates:
……that we’re even having to deal with this. Possible increasing inflation because of Tariffs. Really?!
Now, rates are at risk of going up (instead of down) because of all this stupidity. Before Trump 2.0 and tariffs, our economy was coming in nicely for it’s soft landing. So much for that.
While I don’t know exactly how the tariffs will affect us, and the issue is quite complex, I’ll try to explain it in a simple way, from what I know and have read so far. I’m not going for accuracy here, I’m just giving you a very general picture of how this works.
If there are more taxes on goods, (imports, exports, whatever), costs for businesses to bring us those goods go up. Those businesses either absorb the increased costs, or they pass those extra costs onto the end user. You and me.
Tariffs are going to cause prices to go up on both sides of the border. The extra tax will cause production of goods to decrease, and supply will decrease as a result. When supply goes down, demand goes up. When this happens, prices go up.
When companies south of the border have to pay more for our steel and aluminum, they either pay the tariff and increase their prices, or, they decrease production altogether.
Notice my emphasis on could. I didn’t say they will. I’m a statistics guy. In statistics, we don’t deal in absolutes. We deal in odds.
The game of rates just shifted slightly. Before all this tariff talk, I was predicting that rates are on their way down with more certainty. Now, with inflation possibly picking up again, rates are at risk of staying where they are, or, gasp! going up.
Slow down, though. I’m not saying that rates are going to go up. I’m just saying that the odds of rates going up have increased.
I still think rates are going down, and I’d still bet on it.
Economists are somewhat stumped on how this all plays out on interest rates. We’re possibly dealing with stagflation here, which is a conundrum.
Definition of stagflation from Wikipedia: Stagflation is the combination of high inflation, stagnant economic growth, and elevated unemployment. The term stagflation, a blend of “stagnation” and “inflation”…….
So, we have opposing forces at work, which make it extremely hard to predict the future.
If our economy is hurting badly, and the tariffs accelerate the recession, the BoC will lower the rate in order to keep the economy propped up. When credit becomes cheaper, businesses, and people, spend more money. When businesses and people spend more money it helps keep our economy growing and money cycling.
If we are dealing with super high inflation due to tariffs, the BoC will have to counter that inflation by increasing the borrowing rates. I still think this scenario is less likely.
I might think about locking in. Not because I’m sure rates are going up, but rather, because of the uncertainty surrounding the situation. When there is more uncertainty, like now, a conservative person will be more inclined to stick to the certain, versus the uncertain.
There is so much news coming at us constantly. This week, inflation is up and the Trump tariffs are happening. Next week it could be a different story. Trump flip flops all the time, it’s part of his game.
When we’re dealing with property purchases and mortgages, which usually come with terms that are 3 to 5 years and longer, we’re dealing with long term decisions. To me, the news of the day affects the short term, or whats immediately ahead of us.
Think about it – even in the past, when Tariffs have been deployed, they didn’t last more than a year.
In this case, if tariffs bring economic devastation, Trump will repeal the tariffs quickly. And if not, there’s the mid-term elections in late 2026, which decide the fate of the House of Congress and Senate. If those branches changeover to democratic majorities in 2026, which I’m predicting they will, those branches of government will surely roll back hurtful Trump policies.
Let’s remember that we’re making decisions for the long term, not the short term.
Is now a good time to buy a house?
Let’s put it this way. Are there any homeowners out there who regret buying when they did? Sure, maybe a few. But that’s probably because they didn’t buy the right property, or their personal circumstances changed soon after their purchase.
You’ll never hear anyone say that they shouldn’t have bought their home because of this or that news that was happening. Nope.
They’re glad they bought when they did, no matter if we were in crises or not.
You’re buying a house. That’s a good decision in itself. Date the rate, marry the property. It’s so cliche, but it’s true.
No. And if you were, I’d tell you not to. Generally, I want my clients to purchase a property and own it for at least 5 years. Because within that 5 year period, even if in 2 of those years the values decrease, you can bet in the other 3 years, the value will increase.
It’s cyclical. It’s how things work. But over a 5 year period, you can be certain that your value is going to increase.
And guess what also happens during those 5 years? You pay down the principal on your mortgage, and you’ve had a place to live. A win win. Throw in the value of the property increasing, and you have a win win win. A triple win.
And, to boot, I think we’re still in that buyers/balanced market. Don’t wait for the sellers market to get into owing. You’ll pay more money for the purchase.
I’d still recommend you buy the house. But don’t be foolish about it. Be smart about it. Get yourself a good deal. Put your trust in the experts around you. Make sure your realtor and mortgage broker really know what they’re doing.
I’ve been a mortgage expert/broker since 2009, and a banker for 5 years before that. Dealing with me and my team on your purchase or refinance lowers your risk (or eliminates the risk) of things going wrong during the process.
My team and I do our best to ensure that last minute annoyances don’t happen. We make sure things go smoothly for you when working on your mortgage. We’re on top of things.
Since 2005, I’ve never had a client lose a deposit on a purchase, out of, I don’t know, probably more than 1000 purchases. That’s a 0% failure rate.
We have more offerings to suit your needs.
We have a special low rate that can help you get into a higher price point. Case in point: our 6 month rate special. Our 6 month rate special can be as low as x.29% (it’s unpublished, you have to ask me about it). Having a super low rate at the outset can help you get the higher priced property, because the stress test on the mortgage qualifier is WAY lower then the conventional 5 year rate.
The best part? You don’t have to re-qualify after 6 months. You should prepare yourself for a higher (normally competitive) rate after 6 months is up, but this tool is used to get you in. It’s not long term. It get’s you into the market.
The rate is unpublished. You have to call and ask me about it. And it’s only for high ratio purchases. 250-858-7160.
You have some savings for the the down-payment, that’s great. But you also have some other debt, such as a car loan or line of credit, which hurts your debt servicing ratios.
In swoops our cashback mortgage. For a slightly higher that normal rate, you can get 2%, 3%, or even 4% CASHBACK.
No, it’s not added to the mortgage. No, the rate isn’t crazy high. So imagine, you get a $500,000 mortgage, and I can give you up to $20,000 to payoff those annoying unsecured debts.
Yep, the rate here is also unpublished. You have to call me and ask me. 2508587160, or book into my calendly here.
You tell me your situation and some financial details. And I give you the scoop as to what your situation is, what sort of rates we can offer you, and what your options are. And the reasons for it all. Are you insured? Uninsured? Insurable? AAA mortgage? B Mortgage? MIC mortgage?
Stop the confusion and give me a shout. Or simply reply to this email and let me know that you want to talk.
And sign up for mortgage memo if you haven’t already!
Signing off for now,
David Steinberg, AMP, BComm
Lead Broker, Owner, and Mortgage Strategist
Olympic Mortgage
250.858.7160
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