Canadian Mortgages & Market Trends: Insights with Dominion Lending Centres specialist Sean Humphries

Ciao! Welcome to a new episode of Building Wealth Through Real Estate...Brick by Brick with me, Nico James-Bock, Founder of The CondoWiz™ Group and Broker at Royal LePage Signature Realty in Downtown Toronto.  Today I have the pleasure of speaking with special Guest Sean Humphries, an award-wining mortgage specialist with Dominion Lending Centres.

Sean and I discussed the impact of global politics and local Canadian politics on the real estate market, with a focus on the recent Bank of Canada rate cut and its connection to the tariffs imposed by the Trump administration. We also explored the current state of the Canadian economy, including the impact of inflation and interest rates, and the potential effects of the Bank of Canada's rate decisions on fixed and variable mortgage rates. The conversation concluded with a discussion on the current state of the Canadian economy, focusing on internal trade barriers between provinces and investment in infrastructure.

Sean's Insights and Recommendations:

1. Bank of Canada to potentially reduce interest rates by 0.25% on April 16th and June 4th.
2. Canadian government to consider implementing programs to stimulate the economy.
3. Canadian government to focus on reducing internal trade barriers between provinces.
4. Prime Minister Mark Carney to invest in infrastructure projects to strengthen the Canadian economy.
5. Canadian government to explore development of resources and infrastructure such as pipelines and rail transport.

Sean Humphries - Website

Email: sean@torontolending.ca

Thanks for tuning in 😊

Ciao Ciao

Transcript

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Nico James-Bock: There's a lot going on in the real estate market in global politics, local politics here in Canada. And I would like to unpack some of the

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Nico James-Bock: details that were recently launched upon us with regards to tariffs, the recent Bank of Canada announcement, with its rate cut for today's episode. I am going to invite a special guest, a guest who is no stranger to building wealth

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Nico James-Bock: through real estate, brick by brick. My guest on today's episode is Sean. Humphreys Sean is an award winning mortgage agent at dominion, lending centers in the Gta. While we wait for Sean to hop on to

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Nico James-Bock: the Podcast episode. I would like to just say a couple of words with regards to the recent

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Nico James-Bock: Bank of Canada announcement on March 12th it was another rate reduction, and that was in direct response to the tariffs that have been levied upon us by the trump administration. So what we know for a fact is that those tariffs are in place, there may be more coming down the pike. We'll discuss that with

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Nico James-Bock: on in a few minutes.

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Nico James-Bock: So there remains, as is the

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Nico James-Bock: the practice of the trump administration there remains a lot of uncertainty. So things are changing rapidly. Things are changing frequently, and that's causing a lot of stress on people on the various markets. So we will discuss all of that in a moment. I'm just going to wait for sean to join the podcast

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Nico James-Bock: so Sean has hopped on to the podcast episode. Welcome Sean

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Sean Humphries: Thank you. Nicole

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Nico James-Bock: As I mentioned at the beginning of the episode, you are an award-winning mortgage agent with dominion lending centers, so I'll let you explain a little bit of what you do and how long you've been doing it.

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Sean Humphries: Just want me to talk about all the awards that I've won

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Nico James-Bock: No no just

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Sean Humphries: I'm in the Hall of Fame now. I'm really. I'm huge now.

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Nico James-Bock: I can imagine. Yes, world renowned.

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Sean Humphries: People keep talking about me. I'm all the rage in Europe

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Nico James-Bock: No doubt, no doubt at all. Okay. So just a bit about who you are and what you do of people who are just joining this podcast episode and haven't had the opportunity to check out past episodes where you have been a guest. Can you just tell us a little bit what you do and how long you've been doing it.

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Sean Humphries: Sure. Yeah. So I'm I'm a mortgage broker coming up on 10 years, if I can imagine 10 years

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Nico James-Bock: You know.

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Sean Humphries: That quickly.

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Sean Humphries: And yeah, I do. I also am on the mortgage people, podcast which is my own pop. I'll give that a plug

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Nico James-Bock: Yes.

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Sean Humphries: As well. Where I talk weekly about. You know things that are happening in the mortgage space and real estate space bleeds into politics far more often than I hope it would. But it's so intertwined right now with what's happening and and what to expect. As a result of all of those all those things. So I help a lot of people with their mortgages, renewals, refinances, and purchases

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Nico James-Bock: Okay, yeah, you mentioned everything that's going on. We have to always keep in mind. You know, the factors that affect real estate values. And one of those factors is, you know, global events. So we'll hop right into the episode by talking about some of those

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Nico James-Bock: things that are happening in the economy and in the world of politics that are affecting house values, they're affecting the Zeitgeist. They're affecting how people make decisions. There's a lot of uncertainty as a result of the Trump Administration. He took office on the 20th of January, and since then, which is just what I don't know. 50 days, 60 days

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Nico James-Bock: since then so much, so much has happened. There's been a lot a lot of changes, mostly having to do with tariffs.

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Nico James-Bock: So we discuss. We always have to keep in mind the 7 factors that drive real estate, the most important being the cost of ownership. We'll get into that with what the Bank of Canada is doing in order to help stave off some of these

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Nico James-Bock: tariff tax. There's also job security. So we'll have to look at employment. What's happening with employment population growth, because there's always there's the ever presence of people pouring into the Gtha

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Nico James-Bock: supply. So we are in a time when there is quite a bit of supply, especially in the condo market. Regulatory changes have to do with changes that happen that regulate mortgages.

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Nico James-Bock: taxes, and just the economy in general. And the global factors. So with the, we have also our own local political landscape to navigate. We have a new Prime Minister, the new president of the us took his seat

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Nico James-Bock: on the 20th of January. So I have a timeline. What is your take on what's been happening since the beginning of march. We'll take it from there. There's been so so much. Where do things stand now?

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Sean Humphries: -

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Nico James-Bock: And where do you see things going? Because there's going to be another bank of Canada announcement in mid-april

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Sean Humphries: yeah, I think, so I love that list of that. Those 7 key factors, but one thing that was really.

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Sean Humphries: which really I, I and I. I've gone by this list many times, and I think this a lot of the times is is the 7 things that make a big difference. But what I'm seeing right now is kind of the main factor and the main thing that's

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Sean Humphries: keeping. Maybe some people on the sidelines is uncertainty and confidence in the marketplace.

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Sean Humphries: And so the overall confidence in the economy is the main driver right now. That's keeping people on the sidelines, and that's because of the tariffs. Certainly there's some internal, and that's a global factor as well. But then also the confidence that well, if if real estate really started to pick up, people would jump back into the market.

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Sean Humphries: But we're not seeing that right now, because of those global factors and then uncertainty in our own Canadian market. So maybe that's not as much of a factor as an outcome of all these other different

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Sean Humphries: 7 key factors or drivers that that you mentioned. But what's going on with trump right now? And you've kind of outlined, you know. He's only been in office 7 weeks or so. Is that

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Nico James-Bock: He's created all this uncertainty in the Canadian marketplace. And

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Nico James-Bock: that's also what the objective is is not only in the Canadian marketplace, but also in the Us. He wants people to hear him. He wants people to know that he has influence and

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Sean Humphries: Yeah, I think that's that's 1 of the.

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Sean Humphries: you know, drives his ego is that he's the leader and supreme leader, more like a like a king or a dictator.

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Sean Humphries: Yeah, then, maybe how a President would typically operate. And so he wants to feel. But I think deep down in his mind, however, flawed. His, however, flawed his thinking is, and his rationale for for doing these things. He thinks he's doing the right thing for America, and by.

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Sean Humphries: you know, deporting

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Sean Humphries: people, and by firing a whole bunch of people in the government and tearing down those programs and all the progress that they've made over 200 years of building their economy and their their way of life is being torn down, and because he believes that it's not right. So that then so I think that

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Sean Humphries: he's not just going to jump off of that. These tariffs and the, you know, tariffs on Canada tariffs on Mexico and Europe and China. That's not something that he's going to all of a sudden change his mind about, because he believes that there needs to be some pain to go through in order to get to the end goal, which is jobs returning to America and America being stronger as a result, and really isolating themselves from the rest of the world as they were

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Sean Humphries: closer to. You know the World War one. They're really an isolationist. So I don't think that this all of a sudden changes. I don't think the Canadian Government, regardless of who is in power, will all of a sudden be able to

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Sean Humphries: get Trump to stop the tariffs and stop this. He sees this as a long term thing.

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Sean Humphries: and he's gonna continue to to do it. So for Canada. Sorry do you want to jump in on that? No.

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Nico James-Bock: No, no, go ahead. No. I was just about to say for Canada. Yeah.

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Sean Humphries: Yeah. So for Canada, that means that we will continue to be in a an era of uncertainty and not really sure. Are our jobs affected is our real estate affected.

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Sean Humphries: you know. Do people want to invest in Canada?

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Sean Humphries: That increases the cost of inflation? So inflation starts to go up. But our economy.

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Sean Humphries: staying flat or going down is what's called stagflation. So kind of the worst of both scenarios is typically when the Bank of Canada wants to stimulate the economy, they lower the interest rates, which is what they would do.

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Sean Humphries: You know, if the economy is going down, we've got these tariffs going on

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Nico James-Bock: Right.

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Sean Humphries: But tariffs raise the cost of everything and makes things more expensive. And so what the Bank of Canada tries to do when things are too expensive, and inflation goes up is increase. The interest rates in order to stop inflation from increasing

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Nico James-Bock: Yes.

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Sean Humphries: Which is what they did.

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Nico James-Bock: A prolonged period of time which caused disastrous effects on our economy. But it did reach its objective of lowering inflation. So now, what are they going to do

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Sean Humphries: Yeah, so, and we still have Ptsd from that inflation and the belief that inflation can go up even faster. So the Bank of Canada would have to act faster

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Sean Humphries: and and maybe more extremely, in order to bring inflation back into control. Because we have this belief that inflation can and will go up. So with all of this uncertainty means that

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Sean Humphries: Real estate, unlike in Covid, where we were all sitting at home and deciding what we wanted to do, and moving up. We were all very confident in our jobs after that 1st period of of transition

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Nico James-Bock: Right.

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Sean Humphries: So I think personally that we're not going to have like, even if interest rates come down to try to bring inflation, to control and stimulate the economy. Rates won't stay low for long, and they would go up if inflation starts to go up because of because of these tariffs, and probably the Government of Canada starts to stimulate the economy with other programs

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Nico James-Bock: The scheduled dates for the interest rate. Announcements for 2025 are now on the screen. We've had January 29, th which has a rate which we saw a rate reduction of 25 basis points to 3%. March 12, th which was the most recent announcement, saw a reduction of 25 basis points to 2.7 5%.

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Nico James-Bock: The bank has always said that they want to, perhaps not only have inflation at a 2% rate. But also the interest rate

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Nico James-Bock: probably won't go below 2%. So 2 and a half percent, 2%. Where do you see things happening based on what you've just said on April 16, th and June 4th

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Sean Humphries: So anything short term. I still think that the Bank of Canada reduces interest rates a quarter on April 16, th and then a quarter on June 4, th and I think that they'll probably settle in somewhere around there. Could they go down to 2% for sure there's still room to go down the Bank of Canada. Policy rate was 1.7 5 before Covid. Right? So we still are 1% above where we were. Kind of what was the baseline amount

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Nico James-Bock: Right.

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Sean Humphries: I don't see them going down that low

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Sean Humphries: and if if there's no tariffs, take tariff situation off the off the table, I think we're in this kind of 2.2 5 range for a couple of years. If

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Nico James-Bock: Really think we're kind of down in that area.

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Nico James-Bock: But the thing with the tariffs is that

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Sean Humphries: That's a huge wild card

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Nico James-Bock: Exactly.

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Sean Humphries: And

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Nico James-Bock: Yeah.

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Sean Humphries: They would probably have to increase rates. After some time

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Nico James-Bock: Okay. Okay.

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Sean Humphries: So keep keep an eye on it

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Nico James-Bock: What about the the fixed rate? What's happening in on that front with the the benchmark?

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Sean Humphries: So fixed. Rates don't. So fixed rates

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Sean Humphries: don't react to these, Jane. You know, these bank of Canada rate decisions

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Nico James-Bock: Right. But what about the

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Sean Humphries: The rate does.

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Sean Humphries: So, a variable rate is going to adjust a quarter point right away, and I will often get a call. Okay, the Bank of Canada reduced rates. What's my fixed rate now?

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Nico James-Bock: Right.

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Sean Humphries: The fixed rates have often priced in the variable in the bank of Canada's rate decision. Weeks in advance. They see where it's going. They've priced it out. They've priced out 2 more interest rate cuts before the end of 2025. So I'm not expecting fixed rates to fall dramatically because they've already priced that rate in to the 3, and the 5 year fixed rates

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Nico James-Bock: Okay.

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Sean Humphries: Drop a little bit, but it's not really related to what the Bank of Canada might do

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Nico James-Bock: Okay, all right. So what would your advice be to people who are now facing mortgage renewals who are now facing perhaps a purchase which I'm encouraging people to do if they want to take advantage of the relative softness in prices, what would your advice be when they're looking to secure a mortgage

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Sean Humphries: Well, it's everybody's different, right? So everybody has different risk profiles, and how they think of things. If you want to just model out what's the best interest rate over the next 5 years? The variable interest rate modeling is

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Sean Humphries: is

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Sean Humphries: the best is still the best rate. Knowing that you can lock in a variable into whatever the fixed rate is going at that time. If you want to lock in, you can do that, it gives you some flexibility there.

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Sean Humphries: If

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Nico James-Bock: Do all variable rate mortgages give you the option of locking in at any time

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Sean Humphries: All the ones that I've ever heard of. I don't want to say it's across the board, because I'm sure there's something out there but anything that I've seen any of the big banks they're going to offer you can lock in a variable into a fixed rate at any time. I know you're not locking in what that variable rate is. You're locking in

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Nico James-Bock: Rate is

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Sean Humphries: Whatever the fixed rate happens to be at that time.

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Sean Humphries: Right? Okay, I know you know that. But I want to make sure your listeners know.

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Sean Humphries: Yeah, yeah.

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Sean Humphries: So I would say like.

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Sean Humphries: And then so if the second choice would be a 3 year fixed rate models out to be

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Sean Humphries: sort of cost, effective like that

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Nico James-Bock: Okay.

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Sean Humphries: But right now they're pretty similar, but you would lock in a fixed rate to a variable rate pretty similar. So if you believe that the Bank of Canada is going to reduce 2 more times before the end of the year, the variable ends up being the right choice right away.

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Sean Humphries: But keep in mind that you might. The variable rate might go down 50 basis points. And then you'll say, Okay, I'm ready to lock in my fixed rate. Now and then the fixed rate is still 50 basis points higher

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Nico James-Bock: I are.

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Sean Humphries: Variable rate is right. So you know, be ready just to write a variable if you jump into variable

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Nico James-Bock: Okay, you mentioned that the Bank of Canada, and perhaps other Federal agencies, may do other things in addition to making changes to the overnight lending rate. What other things do you see happening or potentially happening in order to offset the effect of tariffs and to

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Nico James-Bock: prevent inflation from rising beyond what they want it to be

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Sean Humphries: Right. Well, some some people will argue that inflation won't go up as much due to tariffs because our economy will slow down. People will not spend the same amount of money

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Nico James-Bock: Oh!

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Sean Humphries: Which would not drive demand, and we wouldn't see the same.

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Sean Humphries: you know, rush of inflation where it requires the Bank of Canada to increase rates. So there's that idea that we're slowing down because of tariffs. Inflation won't go up. The prices won't go up, but the uncertainty of everything will remain.

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Sean Humphries: and I think that's why the real estate market will be softer than what it would be. Sans tariffs

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Nico James-Bock: Yes, I'm in agreement.

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Sean Humphries: I'm sure you've I know you're up to date on this stuff. But a couple of things that I'm watching are the internal trade barriers between the provinces so that can help things in terms of like

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Sean Humphries: being able to buy Canadian products and competitive Canadian products. So I think that's 1 thing that will strengthen the Canadian economy, also investment into infrastructure. Our new Prime Minister, mark Carney, seems very focused on what what investments can we make into the Canadian economy that is going to help strengthen the Canadian economy on whole.

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Sean Humphries: pipelines, rail transport, different development of different areas that's going to put people to work in Canada, but then also long term, develop some of those.

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Sean Humphries: Some of our resources

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Nico James-Bock: Yeah, yeah, I'm I'm in agreement. And I think that's a side benefit of what's going on now. And it will help to.

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Nico James-Bock: I think calm people's nerves with when it comes to all of the uncertainty that's around us. So I'm glad you mentioned those 2 factors.

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Nico James-Bock: Okay, I think we've covered most of the bases with regards to what's happening in the in the marketplace. I appreciate your

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Nico James-Bock: contribution and your participation in this podcast all of the everything that we've discussed will be in the Transcript, and I also will include all of your contact information. So people can reach out to you directly when and if and when they are in need of mortgage advice, or make to make changes to their financial

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Sean Humphries: Or any of my crystal ball football services. Yeah.

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Nico James-Bock: Exactly. Exactly. Thank you so much, Sean.

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Nico James-Bock: Thank you. Again. That concludes this episode of building wealth, brick by brick. I'm Nico James Bach, a broker with royal paid signature in downtown Toronto. My guest today was Sean Humphreys from Dominion, lending centers.

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Nico James-Bock: Thank you again.