Welcome to the Ontario Mortgage and Real Estate Insights Podcast, your go-to source for the latest developments, trends, and regulatory changes in the industry.
I'm your host, Steve Hemoan, here to provide you with insights sourced from reputable news outlets to help you stay informed and make well-informed decisions.
This podcast is brought to you by Real Approved Inc., a trusted mortgage brokerage dedicated to helping Canadians achieve their home ownership dreams.
Visit realapproved.ca to learn more about how their experienced team can assist you with your mortgage needs.Let's dive into today's episode.
Today, we're focusing on the recent trends in the Greater Toronto Area condominium market as reported by the Toronto Regional Real Estate Board. In the third quarter of 2024, we've observed a slight dip in the average prices for condos.
This is primarily due to relatively high borrowing costs impacting the market segment.
With sales down on a year-over-year basis and an increase in the number of listings, buyers are finding themselves with more choices and consequently, more negotiating power.
The total condominium apartment sales in the third quarter amounted to 4,204, marking a 4.4% decrease compared to the same period last year.
Interestingly, there was a 10.6% increase in new condo listings, with 14,721 new listings added to the multiple listing service system.
This influx of supply has contributed to the average condominium apartment price dropping by 3.3%, settling at $692,672.In the City of Toronto specifically, the average condo price was $713,801, down from $737,035 in the third quarter of 2023.
According to Jennifer Pierce, president of the Toronto Regional Real Estate Board, while sales remained low in the third quarter, there's an expectation for market conditions to improve.
As interest rate cuts continue to have a positive impact, more renters might transition into homeownership, taking advantage of the lower borrowing costs and home prices, which could make monthly payments more affordable.
Jason Mercer, the Chief Market Analyst at the Toronto Regional Real Estate Board, has projected that as the market conditions improve, we will begin to absorb the large inventory of listings that have built up over the past year.
This could eventually lead to tightening market conditions and renewed price growth, though this is anticipated to be more pronounced as we progress through 2025.
Now let's pivot to an interesting topic in the mortgage world, the pros and cons of a 10-year fixed mortgage.
This option has been a part of the Canadian mortgage landscape for some time, but it's certainly not the most popular choice among homeowners.
Most Canadians prefer the more familiar 5-year fixed term, which provides a balance between interest rate security and flexibility.But what about those who choose to lock in their rate for a decade?
The 10-year fixed mortgage can offer peace of mind for those who want to avoid the unpredictability of fluctuating interest rates.
You get the assurance of stable payments for a long stretch of time, which can be particularly appealing in a volatile market.However, this stability comes with a price.
Typically, the interest rates for a 10-year term are around 0.5% to 1% higher than those for a 5-year term.This premium can be a significant deterrent for many borrowers.
Mortgage expert Ron Butler has noted that the 10-year fixed mortgage constitutes only about 2% of all mortgages in Canada.It's not a common choice, and he argues that it's rarely a winning move for most homeowners.
Even when 5-year rates were as low as 1.49%, 10-year rates still hovered between 2.09% and 2.49%.For many, the upfront cost of locking in for a decade isn't justified by the potential benefits. However, for some, the trade-off is worth it.
If you're someone who values long-term predictability and expects interest rates to continue climbing, a 10-year fixed mortgage might be a smart move.
This is especially true for those nearing retirement or for property investors who want to ensure their carrying costs remain stable regardless of market conditions.Of course, there are risks involved.
Breaking a 10-year mortgage early can result in hefty penalties, particularly in the first five years of the term.After that period, the penalties drop to three months' interest, as per Canadian law.
This is something every homeowner needs to consider before committing to such a long-term product.We have some real-life stories from Canadian mortgage brokers that highlight both the successes and challenges of opting for a 10-year fixed mortgage.
For instance, Angela Epp from Cochrane, Alberta shared a positive experience where a client locked in a 10-year fixed rate at 2.50% back in 2020.
With today's rates much higher, that client is thrilled with the decision, enjoying peace of mind knowing their payments won't rise.
On the flip side, Jonathan Barlow from Vancouver shared a cautionary tale of clients who took out a 10-year mortgage in 2016 but needed to upsize their home just two years later.
They faced a staggering $40,000 penalty to break the mortgage, highlighting the risks of locking in for such a long period when life changes unexpectedly.
Ultimately, while a 10-year fixed mortgage isn't for everyone, it can be a solid choice for those with specific long-term plans or a clear vision for the future.
It's crucial to weigh the potential benefits against the risks and consult with a trusted mortgage professional to ensure it aligns with your financial goals.
Thanks for tuning in to another episode of the Ontario Mortgage and Real Estate Insights podcast.We hope you found today's insights valuable as you navigate the world of mortgages and real estate.Before you go, a quick reminder.
Real Approved is here to make your mortgage journey smoother.Whether you're buying your first home or refinancing, their experienced team is ready to guide you with personalized support every step of the way.
Visit realapproved.ca to get started and take the next step toward achieving your home ownership goals.Catch you next time and stay informed with the latest industry insights.
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