Top Mortgage Pro Shares SURPRISING US Election Impact Stats

How do U.S. elections impact Fernie’s real estate market?

🏡 In this episode of The Property Mindset Podcast, Phil Gadd sits down with mortgage expert Rob Bain to reveal surprising stats on how U.S. policies, Canada’s economic shifts, and jumbo rate cuts are shaping Fernie’s housing trends. Learn about fixed vs. variable mortgage strategies, CMHC’s latest changes, and why now might be the perfect time to invest in Fernie real estate.

🎯 **What You'll Learn**

How U.S. policies could affect Canada’s economy and Fernie housing trends.
What the Bank of Canada’s jumbo rate cuts mean for your mortgage.
Should you choose a fixed or variable rate mortgage?
CMHC’s December 2024 updates: Lower down payments and 30-year amortizations.
Why now might be the right time to invest in Fernie real estate.

📚 **Chapters**
00:00 Introduction to the Impact of US Elections on Fernie Real Estate
00:35 Understanding Cross-Border Inflation and Real Estate
03:23 Bank of Canada Rate Cuts Explained
04:26 Variable vs Fixed Rates: What You Need to Know
05:35 Inflation Trends and Predictions
07:10 Strategizing Your Mortgage: Variable, Fixed, or Hybrid?
12:12 Upcoming Changes in CMHC Policies
17:14 Is It a Good Time to Buy? Expert Opinions
20:37 Conclusion and Final Thoughts

**Connect with Rob:**
Mortgage Professional
rob.bain@dlcme.ca
C: 403-308-9411
INSTAGRAM
FACEBOOK

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Transcript

0:00

Did you know, the recent us elections. Can affect the real estate market right here in Fernie. From Trump's policies. To jumbo rate cuts. Find out how it all connects for your buying and selling strategies in this must hear episode. Welcome to the property mindset podcast, where we explore everything real estate from market trends to practical strategies for success. Whether you're a buyer or seller or an inspiring investor, a seasoned professional, or simply someone who loves real estate. This podcast is for you.

phil-gadd_2_11-19-2024_112401: 0:35

Okay, Rob, let's kick things off with, the U. S. elections and how, that can ultimately fact real estate market here in Fernie. so how do you see, the recent U S election, impacting cross border inflation and ultimately Fernie's real estate market.

rob_2_11-19-2024_112402: 0:54

Yeah, hey, thanks Phil. thanks for having me back on the podcast. always great to join you on this. So happy to be here. lots happening, with rates, inflation reporting, Trump becoming the US president, um, all of those, pieces definitely impacting where we're at in Canada. So let's, let's dig into this. the the US economy, of course, they have a big impact on Canada's economy and our rates as well. their inflation came in at, 2. 6 a couple of weeks ago for October. it was over their goal, which is also 2. 0, just like ours, the predictions that they had down there was that it was going to come in at that 2. So it was a bit of good news that, they hit their mark. higher would have definitely been bad news for them and for us. We also have Trump getting back into power, with the presidential seat. there's a couple of things he has shared that might not be good news for future inflation. Them reducing tax on tips over time and, US social security. Of course, that's going to increase spending money. which is inflationary, Adding tariffs for imports from Canada and China. Again, that's going to lead to higher inflation. when you think about all this and their large 1. 8 trillion deficit they currently have, reducing taxes means less money flowing into the government. So the deficit could increase. And if that does go up, bad news for inflation. So don't really like to share bad news with inflation, but that's kind of what it looks like right now from the U. S.

phil-gadd_2_11-19-2024_112401: 2:25

And I guess then, what happened in Canada is we had super low inflation and then, we had some jumbo as all the headlines saying rate cuts. So maybe you could unpack a little bit of that.

rob_2_11-19-2024_112402: 3:23

So, if we rewind time a little bit and, go back to, June when we had our first Bank of Canada, rate cut. so we saw that in June, and then we saw a few following that. And most recently, the, the jumbo 1, in October. overall, the Bank of Canada has cut their rates by 11 and a quarter percent so far, which has brought. variable rates, or prime rate, down most lenders are now at 5. 95 percent for their prime rate. as of October 23rd, if you look at economists and what they're forecasting, we have more cuts coming. the next year is, hopefully going to be on December That's the last bank of Canada. Announcement this year. Is it going to be a quarter? Is it going to be a half? some questions out there about that. and then again, in 2025, they're forecasting more. so potentially more good news, right? And we'll see if we get another half to 1 percent is kind of the estimates there. But again, that's pretty far into the future. So really hard to say exactly. one thing that I think is really important to mention, and lots of clients, this is a big question that I always get, you know, the Bank of Canada rate cuts, that is directly linked to lenders, variable rates. Okay, so for prime rate, mortgages, loans, all that stuff, directly linked to the Bank of Canada rate announcements, however, fixed rates. Are not linked to the Bank of Canada's rate announcements. Fixed rates are linked to the government of Canada's bond rates. It might be very similar things that impact those bond rates, like, inflation, GDP, the unemployment numbers, all of those things that we've been monitoring very closely, 5 jumbo rate cut, like they did in October, we didn't see fixed rates go down. By 0. 5 percent at that same time, right? So they sometimes move similarly. Sometimes they move the opposite. Sometimes one will move and the other won't. Right? So it's, important to understand how those 2 are related, in some ways, but in some ways they're not. because I hate to, have clients under the impression that, when a variable rate goes down, a fixed rate is going to go down because that's not the case. Some other quick notes on inflation numbers that we've seen in Canada here, of course, in, September's numbers, those were released in October, just before that giant cut, and our inflation came in at 1. 6, which was awesome news, right? The, the goals again to be under 2. 0 came in at 1. 6. That was lower than predicted. you know, the, the Bank of Canada like that. So they gave us a jumbo cut. Now, we just got the data for October's inflation or CPI for Canada, and it came in at 2. 0, which was, you know, of course, up from September's 1. Predictions were that it was going to be up slightly. I think they were saying 1. 9. So we're just a bit over that. what's this going to mean for those bond? Rates that lead to the fixed rates. Is that going to push them up slightly? Probably is it going to be enough for us to see? a rate increase. Hopefully not. but we'll see what happens to fixed rates. as we get closer to December and that December rate announcement on the 11th, we will see what happens.

phil-gadd_2_11-19-2024_112401: 6:35

I mean, isn't like always you know, rate cuts. It's a bit of a double edged sword, isn't it? Because, great for people who want to borrow and great for trying to inject money back into the economy. But. sometimes it means the economy is not doing great in other areas. So like you mentioned, lots of things at play here if, inflation goes back up, rates go back up, then, potentially we're looking at something a little bit different. I suppose from our point of view, we're thinking about, buyers in Fernie real estate market. what does it mean for them? Should they be considering variable fix or hybrid? we're going to talk a little bit more about strategy in a bit, but, I just want to ask you a question. If you're a betting man, Rob, what do you think is going to happen on December the 11th?

rob_2_11-19-2024_112402: 7:27

Yeah, I think we've got a good chance that we're going to see, another reduction Come December 11th. my original hope was it was going to be another another jumbo cut, but I don't think we're going to see a jumbo cut. I think we might see a quarter, which is still fine. that's moving in the right direction and overall in 2025. most of the big banks economists are predicting that it's going to be. Okay. You know, another total of of 1 percent and cuts that we see during 2025. so as long as everything continues as it has been, I think that's likely, fixed side of things. I'm hopeful that we're going to see fixed rates continue to come down a little bit. But I definitely don't think that we're going to see a 1 to 1. 25, 1. 5 reduction in fixed rates. I think that is, a little bit of a dream with what is out there for data and numbers I. Don't think that we're going to get back to that state anytime in the near future, it's going to be down the road. It's hard to say that because, we were there a few years ago, back 4 or 5 years ago when folks were getting 5 years in the 1 to 2 percent range, but not the case right now.

phil-gadd_3_11-19-2024_114020: 8:37

so Rob, just going back over what we've sort of discussed, do you, what would you be recommending clients do in this current market? Would it be variable fixed or a hybrid strategy of both?

rob_3_11-19-2024_114020: 8:49

Yeah, that's a great question, Phil. this is something that I try to cover with all of my clients and our work on their mortgage. with everything that's happening, with the economy and rates and inflation what's the best, Strategy, it's important to say that it really depends on, you know, a client specific situation. There's lots of things that we consider here. just to highlight a few what's their cash flow situation look like? what is their, what is their risk tolerance and risk in term of, you know, rates? What, what did they really believe is, is going to happen with rates? what if that doesn't come true or takes longer to come true than what they're predicting? what is their payment variance look like? Are they okay with a payment that changes and do they watch the markets frequently and pay attention to what's happening with interest rates? And really, it's all over the map. Some clients are firm on fixed. Some love variable, and, some want to consider both. And it's great to have those conversations. you mentioned a little bit about a convertible option. that's another strategy some clients utilize that's, going with a. Say, a 5 year variable rate that, you know, they're planning to convert to a fixed in the future. lenders allow that as a convertible option anytime throughout, that 5 year term, they can move into a fixed rate offered by that same lender. So, no application needed, no fees, no, no, re qualifying or anything complicated like that. It's really as simple as them logging on to their mortgage portal for that lender and looking at the options. when they're ready, they click the button and, everything takes place from there. It's a simple process. the only catch with that is the term they move into with that fixed rate has to be equal to or longer than what's remaining on the current variable term they're in. as long as it meets that criteria, they can make that conversion. this is an interesting time right now, because we're seeing variable rates come down. the prediction is that they're going to move further down, as long as that happens and continues to come true, and really, the outlook is that, you know, perhaps fixed rates will move down a little bit as well. the idea is, you go into that right now, you pay current variable rates, which may be a little bit higher than current fixed rates. But as long as everything plays out as planned, The rates will be lower in the future and your net overall interest cost for, that 5 years by employing that strategy. If you're a believer in what's going to happen with rates, you would pay less overall interest. Over the five year term by doing that versus just picking a fixed or variable right now and sticking with that for the entire time frame. as mentioned there's a lot of pieces at play there stuff happens with the economy inflation that maybe isn't predicted. It could change that. could change it for the better or the worse. We don't really know it's so hard to predict all of these things. It's just like the stock market, but it's an option that is available as well. lots to consider. And really, you know, each client's situation, their financial plan, it's unique, there's no one size that fits all. this is where a mortgage expert can help you look at these options and find the best solution for you and your overall financial plan.

phil-gadd_3_11-19-2024_114020: 11:52

Yeah. I think that's the key is to sit down with a professional, and talk it through. like anything, it's going to be dependent on lots of different variables, lots of your circumstance, what you want to achieve. but there's, you know, there's definitely the options out there for, for everyone. So, the key always, you know, sit down and talk it through. So you just want to maybe, yeah, so I just want to shift gears a little bit, Rob and talk about, some of the changes at the CMHC, that are coming this December. I know you've got, some details on that.

rob_3_11-19-2024_114020: 12:30

Yeah, you bet. CMHC, Canada Mortgage and Housing Corporation. So, you know, they're, they're primarily, a, they're, they're utilized and needed when a client is making a purchase and they have less than 20 percent down. So, it's what we call an insured mortgage, default insured, high ratio meaning CMHC. they announced, you know, months to back that there's going to be some changes here coming, as of December 15th, and there's two, the, the main one really is that, the CMHC max purchase price is increasing to 1. 5 million. So that's moving up from what's currently 1. 0 mil. so really what that means is prior to this change. currently, I guess we would say then, you know, if you're purchasing a home that is, over 1 million, you would need. 20% down to make that purchase. so let's use, let's make for example here, let's say 1.25 million purchase price. you needed 20% down. That would be$250,000 to be able to purchase that house. That would be the minimum down payment to be able to get that property after December 15th. that change with it moving up to 1.5 mil, as the cap. So to purchase a$1.25 million house, you would then only need. 100, 000. So really, it's quite a significant change changing that down payment required amount from 250, 000 to 100, 000 less needed to get into that property how that down payment is calculated is it's 5%. On the first 500, 000 and then 10 percent on the amount above 500, 000 up to 1. 5 million dollars. in markets where houses are priced higher, Fernie is one of those potentially, this could be an option for those clients that, want an insured, mortgage that, can get into it with a smaller down payment. The other large change coming on December 15th is the 30 year amortization the 30 year amortization is going to be available to 1st time buyers purchasing a newly constructed. Or an existing home. Okay. So 1st time buyers purchasing a new construction or an existing home and non 1st time buyers purchasing a newly constructed home. Okay. So only non 1st time buyers. They're only eligible for newly constructed homes in this, 30 year amortization. Now, again, this is for those insured C. M. H. C. mortgages, right? So the smaller down payment amount. that's what we're talking about here to be classified as a first time home buyer, the government has, you know, a really long, worded, definition on their website. So I encourage any buyers in this situation to look on there. But really, the short version of it is, you're a first time home buyer. If you have, never purchased a home before but in the last 4 years, the borrower has not occupied a home as a principal place of residence Or their current spouse or common law partner owned and then finally, the 3rd criteria is or 3rd option. You need to meet. 1 of these 3. remember is the borrower recently experienced to break down a marriage or a common law partnership. So, divorce separation, they would be then eligible again for the, the 1st time buyer. Options. So really, you know, some, some changes in there that these are all good news stories for potential buyers looking to get into the market because they can do it with less down payment. And if needed, they can go from a 25 year to a 30 year amortization, which lowers that qualifying payment. To be able to get in that house, of course, there's always a, you know, a negative that to that that they're gonna have a mortgage for 5 more years, you know, more interest that they're going to pay But if the difference is homeownership sooner, rather than later, and the value of that house is going to go up sooner, rather than later while they own it, and they're not going to pay more for it. Then what's really the better option, right? It's a, it's one of those things to explore again, mortgage expert can, can help you look into those options and compare the two, and then you can really make, an informed decision from there on what's best for your situation.

phil-gadd_3_11-19-2024_114020: 16:35

Great. That's some interesting things coming down the line for

rob_3_11-19-2024_114020: 16:39

Yeah, for sure. Right. So some good changes helping with qualification, all of those pieces. So happy to share those as well.

phil-gadd_3_11-19-2024_114020: 16:46

Cool. that's some interesting stuff. it's been an incredible conversation again, Rob. Thanks for, for, for joining me. so just before we close, just want to sort of summarize some points for both buyers and sellers. maybe should keep in mind 2025. Um, and then, yeah, what, you know, what, what is the one thing that, buyers or sellers in the Ferny real estate market, in your opinion, should be focusing on right now? And, one more question before I go. Is it a good time to buy?

rob_3_11-19-2024_114020: 17:18

Okay. So, I mean, uh, you know, I can answer the 2nd question 1st. is it a good time to buy? I very rarely hear stories where somebody says, I wish I would have waited to buy a house. It's always the exact opposite, isn't it? It's like, I wish I should have done it. Sooner, But again, I'm not saying you should always buy. you need to consider your personal circumstances and your financial picture You'll know when the right time is you'll have that feeling. You'll find the right property. It'll be the right one for you for wherever you are in that stage of your life. And when that time comes, then that's the time to move forward. So I think, that answer is the second piece, in my opinion. really, you know, 11 thing to consider right now is, You know, the, the, the rates and the overall expectation of where they're going, right? The rates it's well, it's important. It's only 1, small piece of that picture, right? It's, it's representing the next 3 to 5 years, depending on what term you choose of that mortgage. you're going to have that mortgage for however long it takes you to pay it off. Is that going to be 10, 15, 25 years? 30? I don't know, It all depends on your situation. I think it's surrounding yourself by an expert. you Phil would be a great example of this for the real estate portion of it. And myself as a mortgage broker would be the financial part of it and asking those questions and being confident in whatever decision you're making that it's the right one for you and your current situation. So, it's, you know, I'm going to say the 1st answer is finding those experts.

phil-gadd_3_11-19-2024_114020: 18:45

Yeah. No, that's, that's great. It's, it's like people always say to me, is it a good time to buy? And I always say, yes. It is always a good time to buy, but you need to be prepared. You need to talk to the right people. You need to get all of your ducks in a row. then it is not only the right time to buy, it's a perfect time to buy, in my opinion. you need to evaluate things. You need to look at the market. You need to look at your financial situation. You need to talk to people like yourself. You need to get pre-qualified. If you're in a position to have a couple million dollars in the bank, then it's a perfect time to buy as well. But the key is, especially at this time of year, I believe it's one of the best times to buy real estate, in the whole year. If, you're needing financing, you're 100, 100%, pre approved. If you're a cash buyer, you're in a lucky position. if there's inventory in the market, there's less competition from buyers. when people say, I wish I'd bought 10 years ago. you don't want to be in that position. If, you're ready to buy right now is perfect time to buy. Just quick, quickly to add to that. I feel that if interest rates do go up, Do come down a lot quicker and, and, and faster into the new year. That's only going to do one thing to house prices. That's going to push them up. So, you know, it might be a good time to lock in some equity now and, make that decision.

rob_3_11-19-2024_114020: 20:10

I was going to say exactly that, Phil, if. Predictions move forward, rate wise as what we're hearing, then we're going to have, slightly lower rates for 2025. I think that's going to do nothing but throw some gas on the whole real estate market, right? Which is going to make it more competitive. It's going to bring out more buyers, more investors, all of those pieces, Which can lead to another layer of competition that wants to buy that house that that you want.

phil-gadd_3_11-19-2024_114020: 20:37

If you're loving what you're hearing on this podcast, we really appreciate if you leave a comment below, even better, if you want to subscribe, because that helps us grow the channel, which is, what we want to do the more people subscribe, the more people we can help, rob, what's the best way someone can reach out to you and talk to you about mortgages?

rob_3_11-19-2024_114020: 20:56

Yeah, that's great. Phil. Best way to reach me. I got my website robbane. ca, or you can email me or call me. All of my contact info is listed on that site. I would say pop in there. also, we're talking a little bit about pre approvals and applications, super easy online application on there. It takes about 10 minutes to complete. If you're. thinking about doing something in the future, and you want to take that first step to look into options and prepare for it, looking at a mortgage pre approval is always the first step anybody will recommend. Phil, I know you always recommend that as well to your clients, It's that 1st step and really exploring what options are available for them and their situation.

phil-gadd_3_11-19-2024_114020: 21:34

That's amazing. there'll be all the links below for Rob. So if you need a professional to help you out with some lending, make sure you hit him up. So once again, Rob, thanks very much for joining me and I'm sure you'll be back very soon. So until then, goodbye.

rob_3_11-19-2024_114020: 21:49

Thank you so much, Phil.-