Mortgage 101 – Navigating Mortgage Trends

Todd Veinotte and Clinton Wilkins discuss the impact of the federal election, economic factors, such as interest rates, inflation, and tariffs, and their effects on the housing market and construction materials.

Todd Veinotte
Welcome to Mortgage 101: your guide to home ownership with me, Todd Veinotte and Clinton Wilkins, our mortgage guru. Clinton Wilkins, you missed a good time in Las Vegas.

Clinton Wilkins
I love Vegas. I’m not going to the US right now, just personal choice, but you know what it looks like? You had a great time, and those photos looked amazing, so congratulations!

Todd Veinotte
It was. It was a nice time, and no political questions at the borders, or no harassment from border security or anything like that. So I arrived back, but you know what I got to tell you? I have to tell you, it was in the back of my mind, hosting a talk show and somebody who disseminates opinions and all that stuff. And there’s a lot.

Clinton Wilkins
And there are a lot of things about both of us on the internet, you know, you look us up and everything comes up.

Todd Veinotte
That’s exactly right. And I’m not gonna lie, it was on my mind. It gave me a little bit of anxiety, but in the end, everything was smooth sailing, so all good.

Clinton Wilkins
And I feel like it’s been so long since we had a show, but it’s only been a couple of weeks. I mean, so much is happening, like we were just in the midst of a federal election last time we did our show. Well, we pre-recorded last month because of my trip we did, but it was still in the thick of the election.

Election Reflections

Todd Veinotte
I guess what are some of your takeaways from the election? Any broad-stroke thoughts from a business vantage point?

Clinton Wilkins
I think just overall, it’s just so amazing. In a couple of months, how much change can happen, like, let’s be frank, the liberals were losing here at the beginning of the year, between what’s happened in January, what happened in the US, the tide shifts very, very quickly.

Todd Veinotte
Yeah. Well, they did the best thing they could. I mean, this isn’t a political show, but politics intertwined with life, with finance, and it’s topical, and the best thing that they did was Mark Carney, in my opinion. I just think that was the right choice, hands down. In my opinion.

Clinton Wilkins
I agree. I know, he has so much experience, it’s a no-brainer. And I think the one thing that really kind of resonated with Canadians. They didn’t want another Trump or another Trudeau. They wanted a change. And I think he was right, change. And you and I are very familiar with Mark Carney, with all the stuff that we’ve done with the Bank of Canada. And you know, people are concerned about finances, they’re concerned about relations with the US. They’re concerned about what the Canadian bank is going to do. And I think Mark Carney was that calming force that, you know, the majority of Canadians wanted and needed.

Todd Veinotte
Having somebody with the exact opposite of Justin Trudeau in every way. Not to besmirch Justin Trudeau, but why not? It’s in vogue these days, but with his monetary policy knowledge, that’s got to be a huge advantage, I would think, for the Prime Minister.

Clinton Wilkins
I agree. And you know, it’s going to be very interesting times, going into, forming government, cabinet, getting things rolling, the business of the day, of government. The thing is, when you know that the incumbent government forms government again, things still, I think, continue maybe a little bit quicker than if it were a brand new government trying to form again. Of course, there’s gonna be lots of staff changes in Ottawa, different ministers, different MP’s that need to staff up. But you know, the business of the day, I think, is gonna continue. And I know Mark Carney met with Trump this week, which was certainly very interesting.

Todd Veinotte
It’s highly anticipated. And I thought that Trump, or rather Mark Carney, did a great job, as good a job as could be expected. Canada’s not for sale. I don’t know what else. What else were people expecting? You had some people who thought he should have gone elbows up and all aggressive, and that would have deteriorated so quickly.

Clinton Wilkins
That doesn’t work. No, with Trump and, I think, this is a real estate show. This is a mortgage finance show. And I think it hit home to me when Mark Carney said, you know, Canada’s not for sale, not all real estate is for sale. That’s reality.

Todd Veinotte
That was a great line. Now, I’m gonna bet that was rehearsed, and that was that he didn’t think that off the cuff.

Clinton Wilkins
You know what? That was good media training. That said, he delivered it like it was off the cuff. With Mark Carney becoming Prime Minister, or continuing along as Prime Minister, it’ll be interesting to see what they do with 24 Sussex. I’ve seen a lot of things in the news. It’s not been used since pre-Trudeau, and I guess it’s gonna take about 36 million just to make it livable, and 100 million to bring it up to.

Todd Veinotte
I mean, I get the historic nature or value and in the intrinsic value of the historic nature of it, but I just think that, and I think it’s 150 years, it’s ancient. It’s, I would say, start over. From a Bank of Canada perspective, I’m sure that Mark Carney would know that job intimately, right? I’m sure that he’s not in Canada or the UK. Do you think he might be second-guessing in some way? Tiff Macklem, and I know there’s got to be a complete disconnection there between the Prime Minister and the executive branch and the monetary branch, but I would think that he would, in his mind, be kind of armed. Here at quarterbacking, what tip-back when’s doing to the Bank of Canada?

Interest Rates

Clinton Wilkins
I will just go on a limb, I wouldn’t be surprised if Macklem exits. I can see that potentially happening. I think that he was unpopular saying that the rates are going to stay low for a long, long time. That was not true. I think you and I and a lot of Canadians thought, well, we can’t keep the rates low forever, especially if inflation is increasing. And he set some Canadians down the wrong path. We have to take what the governor of the Bank of Canada says at face value. But, he’s navigated some pretty rough, rough waters here, you know, with inflation and with the high rates. And I think things are certainly moving in the right direction. I think the real question is going to be, you know, what’s going to happen the next several months, into the next several years, especially with what’s going on in the US? You know, I think the bank account is going to continue to lower that key overnight rate. A lot of economists think we’re going to see 50 basis points less by the end of the year. Yeah. But the interesting thing, fixed rates have increased. Fixed rates were edging down to that 399, 394, 389, but a lot of lenders have increased fixed rates over the last few days and weeks, primarily because institutional investors, like banks, have gone and started buying bonds. You know, they’ve gotten away from the stock market. You and I, individual investors, we’re going and we’re buying things in the stock market because things are on sale, but the big institutional investors have not been doing that, and that’s driven up the cost of fixed rates.

Todd Veinotte
Is that a good thing when all of a sudden done because the bond market is a real reflection of the underpinning of the economy? Is it not?

Clinton Wilkins
I think it certainly is that. And I think it’s going to be interesting with what’s going on with inflation. So it’s hard to lower interest rates and say inflation, because we want not to have a recession, but we also don’t want to have high rates. So it’s a very hard balance, and I think that is a very tough job for Canada to be able to navigate that. And we came out of. You know, very high inflation numbers and high rates, and now we’re getting into a more stable environment, and I think the rates that we’re seeing today, yeah, I think we’re going to see them lower. But any rate, from you know, mid threes to mid fours is still a good rate. I’ve been doing this for 20 years. I’ve seen rates as rates in the sixes. I’ve seen rates in the twos, maybe edging down in the ones, but you know, we’re in the middle mark, basically, of where the interest rate range has been the last 20-plus years. And people are like, Oh, the rates are so high. Well, they could certainly be higher. Yes, they could be lower as well, but we’re basically in that median mark and rates, which means that, I think, we’re in a more stable and balanced rate environment.

Todd Veinotte
How concerned are you when it comes to tariffs, and what impact might that have on new home builds?

Tariffs and Supply Chain Challenges

Clinton Wilkins
I think tariffs are a concern, yeah, with all the construction materials coming from the border. But you know, a lot of the materials that we’re using to build homes here, a lot of the materials are Canadian when we think about lumber, a lot of these things are Canadian-made. I think the challenge is with tariffs, we need to work on different supply chain challenges. Maybe we need to buy more things from Europe, from Asia. You know, we don’t always have to buy from the US. The US was our closest trading partner and one of our best friends to Canada. But that relationship had changed before the show. We were talking about even, like, border crossings, and you know how they’re at, like, record low numbers of people crossing the borders, at land borders, and, you know, flights to the US being half full. I think we’re gonna continue to see that for the next, three plus years. It’ll be interesting to see what happens after the midterms in the US.

Todd Veinotte
I would think, though, that if softwood lumber and whatever exports that are going to United States, if that business is drying up, that that could create upward pressure on prices here as well from Canadian companies, because they’re going to demand is not high the trade, they’re going to have to make up that revenue somehow, right?

Regional Housing Market Dynamics

Clinton Wilkins
It’s a really hard, hard balance. And you hear about big employers, even the automatic manufacturing sector, laying off or temporarily laying off hundreds and hundreds of employees. Like, that’s a direct result of that supply and demand issue. Right now, there’s more labour than there is demand for that labour, and that’s challenging. And we never want to be in an environment where, hey, we’re going into recession and we’re seeing mass unemployment, we don’t want that in Canada. So as much as, yes, we want rates to be low. You know, it’s a hard balance to achieve, and I think that’s it’s tough. I think we’re in a more balanced environment today, but it is challenging, and the US is a big factor in our economy and consumer market.

Todd Veinotte
Confidence, of course, has such a connection with the housing market is massive, certainly.

Clinton Wilkins
We have, I think, a high confidence here in Halifax, because the demand is high and, supply is low. In other areas of the country, it’s not that way. Like, if you look at Ontario and you look at BC, they’re still struggling. They’re struggling with a lot of inventory. They’re struggling with the prices softening because there is not as much demand. But we haven’t seen that here, and that’s why a lot of borrowers, you know, they asked me, they’re like, Okay, well, when are we going to start seeing real estate prices go down? I don’t think it’s going to be the case here. We just haven’t been able to keep up with the amount of demand.

Todd Veinotte
We got to where we were talking with the rest of the show? We’ve got a nice guest coming on.

Clinton Wilkins
We have a nice guest. We’re gonna be talking about some mortgage trends and what’s going on in the mortgage industry. You know, Fraud Prevention Month was here in March, and we’re gonna talk about that, and really what’s going on in that Canadian mortgage space. And we’ll talk about what’s going on here in Halifax this spring as well. Okay, we’ll be back.