Mortgage 101 – What Today’s Uncertainty Means for Homebuyers

Dan Ahlstrand and Clinton Wilkins discuss the evolving landscape of mortgage lending.

Mortgage Lending and Summer Break

Dan Ahlstrand
Happy summer, everybody! This is Mortgage 101. I’m Dan Ahlstrand, and he, of course, is Clinton Wilkins. Clinton, how’s your summer so far?

Clinton Wilkins
I was just on vacation the last couple of weeks, so I’m really just getting back in the saddle. I’m coming back with a glorious tan, but one thing that doesn’t rest while you’re away is mortgage lending. I worked a couple of hours a day. I got up and click-clacked on my computer and just had really a glorious time. I was away for two weeks, and now I’m back, and I’m loving it. There’s nothing I love more than doing mortgage lending, and I’m sure our listeners can’t hear that. And I was actually stopped by someone yesterday. I was leaving yoga, and she said, “Clinton, are you sad about your show?” I’m like, “Oh well, honey, you don’t know our show is gonna continue along.” And she’s like, “Oh, are you on YouTube?” I said, “Not only are we on YouTube, but we’re also on Apple Music, we’re on Spotify.” We have a couple of things up our sleeve. Dan, for the fall, don’t we?

Dan Ahlstrand
Yep, it’s going to be an interesting September. I will say it.

Clinton Wilkins
It is going to be an interesting September, and for those of you who are now maybe just tuning in for the very first time, this show was really born out of traditional media. We were on the FM, and then we repackaged it onto YouTube, Spotify, Apple Music, TikTok, Instagram Reels, blog posts on our website, but we are now reimagining this. And I think sometimes when one door closes, another door opens. And how can we keep this show that’s been going on for nine years? How can we keep it going? Obviously, there’s been lots of changes. We started as a weekend show, and then it was during the week, and then it was at the studio where this radio station used to be, and now we’re here. So we’re actually in a podcasting studio, and now this episode is primarily for a podcast. But we’ll see. Maybe we’ll be on that FM dial here before too long. People are gonna have to stay tuned.

Dan Ahlstrand
I said last month, and if you haven’t listened to our last episode, then I encourage you to go back and check those out. That you have to diversify in today’s world. Life is very busy. Right, life is constantly evolving. There are a lot of distractions out there. So if you don’t evolve, then you get left behind.

Clinton Wilkins
You get, and I think it’s the same with mortgage lending, honestly. And I think traditionally, I think borrowers think that when they go and get a mortgage, they need to go to their branch. And I think when you and I were raised, we were told, “Don’t wrong the bank, and the bank is always going to have your back. Where again, this is evolving; the world is changing. When I first started doing mortgage lending 21 years ago, mortgage brokers people didn’t know what we did. They assumed that people go to a mortgage broker when they couldn’t get approved at their bank. Whereas now it’s the opposite. It’s the these mortgage these mortgage holders, these borrowers that come in to see us. They’re the savvy ones. They’re the ones that want the advice, and that’s what this show is really all about.

Dan Ahlstrand
Clinton, it’s summertime. We touched on that off the top of the episode. A lot of people are slowing down. A lot of people are taking time off. They just came back from vacation. I’ve been on an extended vacation. Is it still? Do you still get business in August?

Impact of Economic and Weather Factors

Clinton Wilkins
Let me tell you. Typically, and I mean nothing’s typical anymore, but things normally I find are slower when the kids are not in school. So things are busy, busy, busy up until the end of June, and then we kind of take a little bit of a break in July and August. But I said this before, and I’m going to say it again. And people might argue with me because I’ve seen a couple of comments. Like, trust me, I see what you people are saying, and I see you people are lovely listeners. That things are delayed. I really do think that’s the truth. Like, I think that because of the weather, I think things are happening later than they used to. Let me tell you, we’ve had a gangbusters July and August, and if anything, our July was better than it was in April, May, and June, which is totally not normal. So I’m consciously optimistic that we’re gonna have a really good August, and we’re gonna have a really good September, and it’s gonna keep on going until the end of the year, and why is that? I think some of it is we’re in a plateau situation with the rates, so I think that’s one thing. I think the weather actually did suck in the spring, and I think it delayed things a lot. Like, if the weather’s rainy and there’s still maybe some snow on the ground, and it’s not that exciting, I think it slows down people wanting to buy real estate, and I think there was some anxiety around what’s going to happen in this economic environment. We were talking a lot about the cost of oil and what was going on in the Strait, and whether there was a war happening, and what’s going on with our relationship with the U.S. and all of these things. As much as we say, okay, this might impact the cost of fuel at the pumps. I think it does impact borrowers and their perspective, and their confidence in going to make one of the biggest purchases of their life.

Dan Ahlstrand
Makes a lot of sense, right? If you’re going to make that big decision to make that big purchase, and the world is in upheaval, yeah, it makes sense to kind of just take a sober second thought, and just kind of see where things are going to go.

Clinton Wilkins
And I think we were seeing that with people that were buying homes. Are we seeing that so much with people that are refinancing or renewing their mortgages? Maybe not, because they already own a home, and they might, in some cases, have no choice. Like if your mortgage term is up, you have to renew at the end. If you need to refinance, like are you waiting today or going to wait a year, like, if you’re refinancing for a specific reason, chances are you want to do it now.

Dan Ahlstrand
You mentioned rates. We saw the last decision from the Bank of Canada to hold steady. A lot of the indicators in the markets are also saying to hold steady. In fact, we could see those rates hold steady for the remainder of the year. You’re in the inside of this. What are your thoughts on it?

Mortgage Rates and Economic Uncertainty

Clinton Wilkins
I definitely agree that we’re in a plateau, but I think that we’re in the situation where we can expect the unexpected. This is like Big Brother. This is a reality TV show, and we’re living it every single day. I do think we’re on a plateau. I think it’s going to hold until it doesn’t hold. And are they going to take rates down? Are they going to keep them the same? Are they going to increase them? The crystal ball is broken, and I have bet on this so many times, and I’ve usually been pretty right. I haven’t, obviously; I couldn’t expect COVID, and I couldn’t expect how quickly rates went down slash went up. But we’re listening to this every single day, and I’m looking at what’s going on with the bond yields. I’m looking at inflation. I’m looking at the job numbers. I’m looking at GDP. We’re looking at these things, and I’m taking what economists are writing. And there’s so much news that happens, and there’s going to be a lot of news that typically comes out leading up to the Bank of Canada. People are talking about this more than they used to be, and there are hypotheses, and I think they even survey economists and get their take on it, so there is a likelihood that we have a pretty good idea what’s happening before it happens.

Dan Ahlstrand
Now, should uncertainty in the rate world- the volatility that’s happening out there. We don’t know what’s going to happen tomorrow, right? There’s instability in the Middle East. There’s instability in Ukraine. There’s instability all over the world. The trade relationships between Canada, the United States, and all over the place. It seems to change by the hour. Should that keep me on the sidelines? Should I be wary about getting involved in the biggest purchase of my life?

Clinton Wilkins
Well, I think you need to be cautious. I think no matter what you do, you need to be cautious. But you can’t let all this noise dictate your life. Should you go out and throw caution to the wind? No. Make it educated, and I think a cautious decision with which with with what is within your risk tolerance, and that’s why I think using a mortgage broker is so important because we’re in the thick of things. We know what’s going on. We can give the advice, and we can look at your whole situation from your income, your assets, and your credit, and then see if this is going to be within your risk tolerance or not. I don’t know. It’s hard to say if you’re at the absolute top of your price point of affordability. You’re taking a variable rate. You have to take a variable because you can’t get it approved for a fix. Maybe because that rate’s higher. Should you make that decision? Sometimes I look at people, and I say, here’s what you can afford, and here’s what I think would be maybe a more responsible kind of price point. The challenge is sometimes the affordability and what people can get approved for is not the same thing. What I mean? Like no one wants to sit in a home that they can’t furnish, and they have to eat Kraft dinner or peanut butter. I said this so many, so many times, but it really is true, and I think people need to take that sober second thought. I want everyone to own homes. I think that’s so so important. I’m seeing so many of my clients who were very young and bought homes five years ago that literally I’m their favourite person because they’ve increased their net worth so substantially over the last five years, and they say to me, they’re like Clinton, our friends, our colleagues, people that we know. If they would have made the decision that we did five years ago, they would just be so much further ahead of the game. And they feel kind of sad. For some of these folks, they may never be able to get into that housing market, just because it is that much more prohibitive today than it was five years ago.

Market Conditions and Buyer Behaviour

Dan Ahlstrand
How’s the market doing, Clinton? We know that it has been quite busy. We’ve seen prices on the rise. We’ve seen other pockets in the country where real estate prices have declined and have been declining for several quarters. Why is it that Atlantic Canada isn’t seeing it isn’t happening yet?

Clinton Wilkins
It’s a lack of supply and high demand. This is really a supply and demand game across the country, and I think that’s another reason why maybe we haven’t seen as many real estate transactions here in Atlantic. People were waiting because they see real estate. I’ll call it on sale in areas like Ontario, where some parts of Ontario and some real estate classes are like 25% off. They think that real estate maybe here is going to become 25% off in the future, but what they don’t understand it’s a very different market here than it is in the Toronto condo market, for example. We’ll talk more about this on the next episode, but there’s lots of impact. On, I think just buyer behaviour based on what’s going on within the news, but also what’s going on in that economic environment.

Dan Ahlstrand
We’ve talked about mortgage brokers. What the heck are they? That’s what we’re going to look at when we come back. You’re listening to Mortgage 101. We’re back in minutes.