Mortgage Predictions 2021

December 28, 2020 | Posted by:

Mortgage Predictions 2021 Canada

What can you expect for the calendar year ahead?

2021 is upon us. Coming out of the most challenging year in recent history you have a lot of big plans for the annum ahead. One of them for many Manitobans is buying a home. What better way to bring some stability into your life while preparing for a brighter future? That said, you hold some understandable uncertainty as the new year unfolds, and would like some educated insight into what’s to come. While 2020 has taught us all that anything can happen, there are some predictions regarding the Winnipeg real estate market that you can very likely take to the bank. Here they are.

3 Highly Likely Predictions About Getting a Mortgage in Winnipeg in 2021

Prediction 1: Mortgage Rates Will Rise After the Midpoint of the New Year

Mortgage rates bottomed out at the tail end of 2020, hitting an official all-time low. Extremely low rates persist as 2020 transitions into 2021, but how much longer will these low rates last into the new year? 

We don’t predict them to rise significantly in the first or even second quarter. They will likely experience a lift towards the end of the second quarter, but the uptick will be negligible. This is because the Bank of Canada (BoC) has stated that they will maintain the current policy rate until their inflation objectives are achieved, which will take some time:

“Canada’s economic recovery will continue to require extraordinary monetary policy support. The Governing Council will hold the policy interest rate at the effective lower bound until economic slack is absorbed so that the 2 percent inflation target is sustainably achieved. In our October projection, this does not happen until into 2023. To reinforce this commitment and keep interest rates low across the yield curve, the Bank will continue its QE program until the recovery is well underway and will adjust it as required to help bring inflation back to target on a sustainable basis. We remain committed to providing the monetary policy stimulus needed to support the recovery and achieve the inflation objective.” (Bank of Canada, Press Release December 9 2020)

Does the BoC statement above mean that mortgage rates won’t rise until 2023? Certainly not. Lenders need to make money. While they may not get the same level of sympathy as most businesses who suffered economic hardships in 2020, they too depend of a period of recovery in 2021, and as such they will have no choice but to increase mortgage rates. You can expect this to be a slow process, but one that will become more evident in the third and fourth quarter of the annum. In order to capitalize on the low rates birthed by the events of 2020, you will need to lock into rates in the first or second quarter. Even if you prefer a variable rate mortgage, you will want to enjoy the “savings” by starting now. 

Prediction 2: Winnipeg Real Estate Inventory Will Tighten Fast

Beginning in the first quarter of 2021 the inventory of available residential real estate in Winnipeg will tighten. This is already happening (December 2020) thanks to record breaking sales in the last half of the year which has been spurred on by all-time mortgage rate lows (as per above). 

Since new residential developments won’t pick up until later in 2021 as the economy recovers inventory won’t open up until 2022. That means if you plan on buying/investing in 2021 while mortgage rates are low, you need to act in the first or second quarter. Waiting longer will reduce your options, especially if in the market for a dream home for your household. 

Prediction 3: Housing Prices Will Keep Rising

As supply becomes smaller (as per above) and demand remains strong, housing prices can only go up. This has already been occurring, with values of homes rising up to 45% year-over-year. Given that residential inventory won’t open up until 2022 we predict that these values will continue to rise through 2021. How much will they rise? The most recent Royal LePage Market Survey Forecast calls for 4.75% increase in house prices in 2021. That said, the average price of a Winnipeg home remains under $320,000 which makes it the most affordable of all metropolises across Canada. Act now while that remains to be the case. 

Call mortgage broker and specialist Ron Chan at 204.290.9950 for a pre-approval and more.

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