News Update: 95.7 News Radio – December 30th

Clinton Wilkins, in a year review with Todd Veinotte on 95.7 News Radio, predicts a positive outlook for 2025, with the Bank of Canada likely to reduce its key rate, benefiting variable rate mortgage holders. He notes that this year there were significant changes in mortgage rules, including the return of 30-year amortization for first-time buyers and high-ratio insured refinancing at 90%.

Key Mortgage Stories of 2024

Todd Veinotte
All right, so you’re in chat with Clinton Wilkins, our mortgage guru, and co-host of Mortgage 101, your guide to home ownership, which airs on our radio station monthly. Clinton Wilkins, hello, how are you?

Clinton Wilkins
Hi Todd. I’m doing great. You know, it’s December. It’s almost the end of the year, and I’m looking forward to 2025, I think it’s a positive outcome.

Todd Veinotte
Why do you say that?

Clinton Wilkins
I think it’s going to be a busy year in 2025 I think the Bank of Canada is going to continue to reduce the key rate, which is going to be positive for anybody who has a mortgage that’s obviously variable, or anybody who has also equity line of credit. I think the real question is going to come from borrowers, what’s going to happen with the fixed rates? I think looking to the US and what’s going on with the bond market, I don’t think that the fixed rates are going to be going down anytime soon. I think a lot of people were kind of waiting and hoping that was going to happen. And I don’t know if that’s going to be the case next year, but I think there’s some positive outlook, at least from a variable-rate perspective.

Todd Veinotte
For sure. So looking back on the year that was, what do you think some of the biggest stories were from a mortgage vantage point?

Clinton Wilkins
I think the number one story is of the Bank of Canada. You and I were talking at the beginning of the year on Mortgage 101. You know, my estimate was that they were going to reduce the key overnight rate by 100 basis points. Obviously, now that’s well exceeded it, with almost 200 basis points reduced here by the end of the year. I think the other big news story is the federal government has made a lot of changes. It’s the first time in I think, 15 plus years that we’ve seen mortgage rules starting to be relaxed. I think bringing back the 30 year amortization for first time homebuyers getting a high ratio insured mortgage is huge. I think that’s going to enable a lot of borrowers across the country to be able to qualify that weren’t able to qualify before. So I think that’s very cool. And, you know, some other unique products, like coming back with an insured, high ratio refinance, okay, 90% loan to value starting in January. So some big news stories. And I think at the end of the day, it’s around creating housing. And we have that challenge here in Halifax, there’s not enough supply and there’s more demand than there is supply. That’s not the same story necessarily across the country. There certainly are other areas where there’s lots of supply and there’s not as much activity, but I think we’re going to see a lot of activity here in Halifax. I expect that we’re probably going to see the values continue to increase. I expect we’re probably going to see at least a 5% increase next year in property values. And I think we’re going to see a lot more activity. You know, there were a lot of borrowers and buyers that were sitting on the sidelines, I think, primarily because of rates and uncertainty from the economy and inflation, but I think we’re going to see some more borrowers enter the marketplace in 2025

Todd Veinotte
Yeah. For people listening right now who want to enter the market, you saying that the home price increases are going to go 5% that’s not good news.

Clinton Wilkins
I don’t think it’s good news. I think for the borrowers and the buyers that were looking to get into the market, they are waiting. They’re trying to wait out the rate. But the challenge is, when the rates come down, and even if we’re just talking about variable rates coming down, it will bring more buyers into the market, and when there’s more demand, and if there’s no increase in this plan, the prices will go up. I think a lot of people were sitting on the fence maybe the last 12,18, to 24, months, and they’re waiting for rates to come down. But the challenge is, with lower rates oftentimes it means higher purchase prices. So I think that’s the story that we’re going to see here in 2025 and you know, you can always date the rate. That’s what we say. You know, the rates change all the time. The challenge is that the purchase price is what the purchase price is, and that’s not going to be changing.

Impact of Rate Changes, and Construction on Home Prices

Todd Veinotte
Inventory is always a challenge, and this all ties in with it, new home construction, new builds in the Halifax area. Where are we with new home builds?

Clinton Wilkins
I still don’t think that we’re building enough. There certainly is some construction happening. I think the most construction that we’re seeing is the apartment, like you see it out your window here from the studio Todd. There’s towers or cranes in the sky all over downtown Halifax and in downtown Dartmouth, we’re bringing a lot of apartments online. And there was a story in All Nova Scotia here a few weeks ago, or maybe a couple months ago, that the demand for apartments now has started to ease a bit. One of the big landlords in Halifax has said that the actual average price for two-bedroom apartment now is sub $2,500 where that had been continuously increasing just due to the lack of supply. There’s hundreds and hundreds of new apartments coming online. And you may not really think, how is that going to impact, real estate buying or getting a mortgage in Halifax. Apartments are needed as well. And I think that we need to remember that any housing unit is a good unit. And there certainly are a whole group of little old ladies and little old men that would have moved into an apartment over the last five years and free up more supply if there were apartment units to be had. So thinking very positively about what’s going on in the rental market. And you could hear some criticisms around the pricing, and the amount of luxury and high end units that are coming online. But I think any unit is a good unit, and it will free up some of that lower value cost real estate and apartments, when some of this more expensive stuff does get opened up as well.

Todd Veinotte
Okay, affordability in general, this is a huge story when it comes to housing. Do you have some concerns when it comes to affordability?

Clinton Wilkins
I think affordability is a concern at every price point. And it doesn’t matter how much you make everyoneis feeling the squeeze Todd from housing, the cost of fuel, to groceries, like I see it when I go to the Superstore. You know, the bills for an order of groceries has continued to increase and increase. Everything has gone up. And the challenge is that the incomes have not paced, but from an inflation perspective, things are certainly moving in the right direction. You know, we’re seeing inflation get down to that target 2% number, and it is a different story in the US, Todd. And I know it’s hard to to compare apples to apples, because our economy here in Canada is very, very different from the US. But when we’re looking at things like GDP and inflation, our economy really, really is slowing compared to what’s going on in the US, and that’s why I think the Bank of Canada is going to continue to lower the key overnight rate and make that cost of borrowing more attractive for everyone. It’s not just homeowners and mortgage holders and people with an equity line of credit that’s impacted by the Bank of Canada, its businesses, it’s the banks. It’s how we’re going to get more capital into the market. And if we have lower rates, it will stimulate more spending.

Affordability Concerns and Government Involvement

Todd Veinotte
Indeed, indeed. So what about a potential change in government, or rather, when it comes to the politics of all this, how political do you think, or how much does politics play into into housing in general. What are your thoughts on politics and housing and mortgages?

Clinton Wilkins
I think it’s huge. And we’ve seen obviously different governments make different rule changes. And some of these changes that were announced by this Liberal government in 2024 could very easily be rolled back, or could very easily be changed if the government does change. You know, every government wants to have their own impact. And I can tell you, housing is on the forefront of every government’s mind, every political party. And should housing be a political matter? I think it certainly does need to be. And we are in a crisis here in a lot of areas in Canada, and it’s not just from a federal government perspective, and I know that’s what you’re talking about with the potential election, but it takes all levels of government to change what’s going on with housing. And we need the federal government involved with the province, and we need the province involved with HRM in terms of really getting these shovels in the ground. And we need to have, you know, obviously, a more aggressive housing policy and outlook. And Halifax obviously, is not alone, but Halifax really has been really challenged over the last four or five years. From a housing perspective.

Todd Veinotte
what are your thoughts on densification and building up, as opposed to sprawl?

Clinton Wilkins
We need the density. I think all along Yonge Street, where the studio is, all along Robie Street, on Wyse Road, where our office is in Dartmouth, should be all towers. You know, it’s the access to services. We’re talking about transportation, you know, build up in these corridors. I think it’s going to be very, very healthy. Urban sprawl is expensive and urban sprawl is challenging. The one thing I will say is Halifax, Nova Scotia, we have a lot of real estate. We can certainly open up big loss of land. But, you know, it’s not that long ago, we had some huge fires. And you know, I think that really needs to be planned out properly. When you think about going down the Hammonds Plains Road. No more housing can be sustained there just even from a transportation perspective, the lack of city water. You know, these are a lot of concerns that we need to think about. You know, we may have a lot of land, but we need to think about the other infrastructure before we build homes.

Todd Veinotte
All right, continuing our year-end chat with Clinton Wilkins, we talk a lot about education on the show and mortgage education, this has been something that you’ve held dearly and you’ve been committed to for a long, long time. Why is education, when it comes to mortgages, something that you think is so important?

Clinton Wilkins
I think what is scary for consumers Todd, is really the unknown. I talk to consumers every single day, and I actually see clients myself. I’m not just sitting in my ivory tower and and talking on the radio. I’m in the trenches, and it would really surprise you, the lack of knowledge and understanding. It’s a very complicated widget here in Canada, mortgage lending, and that’s why I think it’s so important to seek the advice of an unbiased mortgage professional, the differences between lenders would really surprise you. And I think over the last couple of years, the differences are even more than the similarities. And not all lenders have the same pull from a rate perspective, not all lenders are the same from a policy perspective, and that’s one thing. It’s kind of interesting. You know, when we look at a file, it’s like a snowflake, and I know there’s a lot of snow in Halifax. It’s around income, assets and credit. And how do we best tell and present the story to a lender to get the best possible solution for a customer? And when we’re doing a transaction, it’s not a transaction forever, even though you think mortgage is a death loan, but it’s around the term, and the term is just so important, and people’s needs have changed. Todd, especially over the last couple of years, they’ve changed, and they’ve progressed more. And I think clients were just at one time, just so focused on the rate and just getting the transaction done. I think that’s what we really heard early days of the pandemic, which, believe it or not, we’re going on five years. Five years ago clients really just wanted to get it done. It was around the rate, but it’s really shifted the conversation more and more to the advice piece, just because I think a lot of people are having a hard time, from an economic standpoint around inflation and so the needs and the conversations have shifted.

Education and Advice for Mortgage Holders

Todd Veinotte
So for those people having a hard time, what is some good advice that you can give people? What are somethings that they could do to help deal with the hard time? Because you can always be and should always be proactive.

Clinton Wilkins
Definitely be proactive. And I think, ask for help and ask the questions, don’t just stick your head in the sand likw an Ostrich, like we like to say from time to time. So ask for help. And the nice thing is, if people had purchased a home prior to 2020, typically, they have a lot of equity in the house. Todd, so, you know, we’re looking at a lot of refinances, and the refinance may be to float some equity. So when you refinance, you can go up to 80% of the market value of the house. So that’s one thing that we certainly are seeing a lot, but the other thing that we were seeing, you know, is this renewal cliff that we’ve really been talking about. I don’t think it’s quite as bad as the media makes it out to be, but certainly people need to be proactive. I can definitely tell you, that there’s a lot of people that are coming up for renewal, and even if we’re not pulling equity out of the home Todd we are playing sometimes with the amortization. People are choosing to go back up to 25 or 30 years in terms of an amortization perspective, just due to the current rate environment. They want to be able to bring down their monthly output, not so much, even the borrowing cost. I don’t know if that’s what people are concerned about, but they’re really most concerned right now around the payment, and I think that’s what people are buying.

Todd Veinotte
All right, stretching out your amortization, your payments, although it can ease the short term pain, and in some case, absolutely necessary and integral to do so. But I would ask you, perhaps, to weigh in on on people not doing that unless it’s absolutely necessary. What would what are your thoughts on that?

Clinton Wilkins
You know, there’s certainly a lot of times I talk to people I’m like, okay, 20 years from 25 years, not that much difference. Or from 25 years to 30 years, not that much difference. But I do see people that are coming up and they have, for example, like, 10 years left in their amortization, and at the current rate environment, they’re like, I just can’t handle more of a payment. And I think maybe they went very aggressive a few years ago. And I think when they’re looking at extending the amortization, it’s not a forever plan. They’re not planning on extending it 25 or 30 years, and then just paying a mortgage over the next 30 years. They’re doing it for the next three to five years with hopes that in a couple years the rates will be less, and I think shorten the amortization from there. Then, I think go back to their their initial plan, and that’s why I think it’s so important to ask the question, what is the goal here? Is the goal to get this paid off as quickly as possible? Or is the goal really around payment, or is it somewhere in between? And I think people’s objectives and goals have changed, and I think they’ve had to change. And, you know, I think it’s just about asking those questions. And when I think of mortgages coming up for renewal, it’s such a big piece of people’s lives, it’s important to look at all of their finances when that happens.

Todd Veinotte
Okay, so you say their objectives have changed. Why do you say that?

Clinton Wilkins
It’s around cash flow. You know, we talked about inflation, you know, the cost of living overall is high, and incomes have not paced and that’s why I think it’s a temporary reset. I think for some folks, existing clients as new clients, we’re talking to them, you know, the biggest concern, really, is around payment. I’ve used this term. Canadians were more drunk on cheap money. We they were and, you know, I think maybe some people went a little bit overzealous. You know, we’re talking about pre-stress test, or when we were stress testing at a rate around where the rates are right now. So we know people can qualify. It’s not so much a qualification issue. I think it’s more of a lifestyle issue and a payment issue. And I think that’s what we’ve really been seeing at least in 2024.

Todd Veinotte
Indeed. And again, like you said, Don’t ostrich. And this all ties in to having that conversation with your lender, with your mortgage broker or whomever, but, you have to deal with it. You have to be proactive. And it starts with with knowing the details. And although it’s difficult at times to do that, the alternative is disaster, right?

Clinton Wilkins
Alternative is not good. And I really do encourage the listeners to start the conversations early. There’s so many times even in December, I was talking to people a couple weeks ago that have mortgages renewing this month. That’s really too late. We need to be having the conversations like, three, four months plus before the renewal. And you may think, Hey, I’m just going to wait. I want to see if the rates are going down. And I always tell consumers, and this is where there’s some misconception. I like getting something approved, even if it’s three, four months away. And then if the rates go down with that lender that it’s approved with, we can always float the rate down. The approval doesn’t necessarily mean that, okay, we’re tied, and this is the way it has to be. So I think do it early and have something in place that’s going to work for you. And you know, I think we’ve really seen that. We’ve actually seen some rates go up Todd, to be honest. And although we can, we see the mechanic continuing to reduce the Q overnight rate. Some of the fixed rates really have edged up over the last several weeks to a month.

Todd Veinotte
All right. Looking forward to 2025, and lots of great conversations with you, including early January. We’re all set for Mortgage 101.

Clinton Wilkins
Yes, we’re going to be talking about ‘Merry Debtmas,’ which obviously is a very important time of the year, you know, coming out of these holidays, Todd. You know, some people really have overdone it, or we were talking continuing the conversation around financial health. And if there’s the conversations really going to be about refinance, what do the mechanics of a refinance look like? Who is that right for and we’re going to bring on an exciting guest as well. So we’ll, we’ll have that tied up, and I look forward to getting it on the air on the second week of January.

Todd Veinotte
Okay, Clinton, we’ll see you in a couple of weeks, or we’ll see you next week, I suppose. And thank you so much. Happy New Year, my friend.