Oil Prices & Real Estate Choices
How the recent drop in oil prices REALLY affect real estate and mortgages
With all the recent media coverage on the doom and gloom of the oil industry; it's time to examine how the drop in the price of oil may affect you from a mortgage and real estate perspective. The headlines lately have all been about the decline in home sales for the first couple months of 2015 and the rising number of houses listed for sale. At first glance this seems alarming, but upon closer examination most of these articles are using comparisons to 2014. It must be noted that 2014 was one of the strongest years ever for real estate in Alberta, so it's not hard to believe that 2015 is unable to sustain these monumental numbers!
The good news is if you're a potential buyer right now is there is a lot more selection than last year at this time. The other good news is mortgage interest rates are at, or near record lows still. But if you think you're going to be able to find houses at amazing bargain basement prices, that's not what we're seeing in the market. Overall, it has definitely shifted from a seller's market, to a buyer's market, but a fair priced house, in the lower to mid range for pricing is still moving well in most of Alberta. If there are any bargains to be had, they're to be found in the upper range of the price spectrum. The sale of million dollar plus houses has come to an almost standstill as the pool of potential buyers for that price point has shrunk dramatically.
If you're already a homeowner, there are some things to consider as well. The Bank of Canada announced a drop in the overnight rate, which has brought the bank's prime rate down to 2.85%. This has lowered the rate on products such as Home Equity Lines of Credit (HELOC's) and Variable Rate mortgages. A weakening economy means lower inflation and lower bond rates. This in turn creates lower rates on longer-term mortgages like a 5-year fixed. So whether you choose a variable type product, or fixed term product; right now rates are extremely low. Many of our clients are calling us to take a look at refinancing their homes while rates are low and house prices are still relatively high. Appraisals done lately do not reflect any lower sales yet, so it's a great time to consider refinancing your home. Refinancing usually means a lower monthly payment overall when you consolidate debt.
So whether you're looking to buy a house right now, or thinking on taking advantage of your existing home’s value while we're at the peak of the market; it's a good time to consider talking to a mortgage broker very soon who can explain all your options.
JUST RECEIVED YOUR ANNUAL MORTGAGE STATEMENT? Don't just file it...When your annual mortgage statement comes in the mail (usually by end of February), you may just glance at the balance and file the document in your “house” file until next year. The thought is that it’s locked in and there is nothing to do anyway, so you put it away – out of sight and mind. We are all thinking about getting our personal taxes in order, and it seems less urgent to look at the mortgage. But don’t just put it away until next year- the information in the statement includes your balance, rate, payment, interest paid for the year, and your future renewal date. My job is ultimately to help you with options and decisions throughout the life of your mortgage, some you may not even be aware of. Call me, and let's walk through your statement together.