Phew, 2021 has come and gone. I have happy thoughts reflecting on the good that came in the past year, and I have excited thoughts leading into 2022 as well. The pandemic has still been up in the air this past year, but we were able to adapt and shift our ways of living to live our everyday lives in a somewhat more normal state. When it comes to mortgage and finances I think there are quite a few things to look back on, in terms of changes that we saw, and changes we might continue to see in the year ahead.

Firstly, Mortgage Rates

In 2021, we saw record-low interest rates. These low rates made it easier for homeowners to pay off more of their mortgages while increasing the equity in their homes. Even home equity loans saw fairly low-interest rates.

Mortgage rules have been known to be tighter this year due to financial risk, with changes to the rules on mortgage stress tests for homebuyers which were implemented in June 2021. The minimum qualifying rate for uninsured residential mortgages with a down payment of 20% or more rose by 2%, or 5.25% (whichever one is higher). This increased from 4.78% which we had seen in the year prior. This means that to now pass the stress test, you must have a solid income and a good debt to income ratio to show that you could still pay your mortgage payments at a higher interest rate if they were to go up in the future. Lenders want to see higher credit scores and larger down payments as well.

According to Google Canada, searches for “house for sale”, “mortgage loans”, “mortgage calculators,” and mortgage rates are the highest they’ve been in five years.

My 2022 prediction: Interest rates will be going up in the new year, so it’s important to get pre-approved for a mortgage now. The good thing about getting pre-approved is that if the rates go up, lenders will still honour the amount that you got pre-approved for and that rate for up to 90 days on average. That means that if you are starting to look for a home or will be in a few months, locking in a rate now, protects you from paying a higher interest rate later so long as you buy within the rate hold window of time.

Next, The Real Estate Market in 2021

Home values are continuing to rise. With remote work still being extremely popular for a lot of employees and employers, many families moved out of Toronto and into areas like Barrie, Innisfil, and many surrounding smaller towns like Midland, Alcona, and Elmvale. Will remote work still be as popular going into the new year? I guess we’ll find out!

The average house in Barrie increased throughout the year and as of July 2021, the average price of a home was $822,444. The average price in November 2021 was $920,273. From 2020, home values increased by 30% in July and 33.9% in November. That means anyone who bought a home in November 2020, saw a 33.9% increase in the value of their investment in just a few short months.

Overall, the average price for the first 11 months of 2021 was $822,108 which went up 30.5% from the first 11 months of 2020.

My 2022 prediction: We may see more digital sales in the future due to the hot housing market and homes selling fast. Remote work is still popular so we will probably see more people moving north out of Toronto to Barrie and the surrounding area. The housing market values will continue to rise which means investments in real estate will see gains in terms of value. The downside to this would be that those trying to buy their first home will have a tougher time as prices rise.

Now Let’s Talk, Construction Boom:

According to a recent report, reconstruction and renos on existing or new houses are at an all-time high since the 1970s. This is due to a sharp drop in interest rates. Homeowners who have owned their home for a long time now have ample amounts of equity built up in their home which they can access to renovate or reinvest in more real estate. I quite commonly saw parents who had equity in their homes gift money to their children to put towards a downpayment for a new home.

My 2022 prediction: These numbers will continue to rise as homeowners are putting their finishing touches on their renovations and as remote workers invest more into their living spaces to make working from home more comfortable than when they were first shifted to remote work at the start of the pandemic.

Looking Forward Into 2022

I am excited about what the new year will bring in 2022. The housing market will continue to rise, so if you’re looking to buy a home, apply for a mortgage sooner rather than later. These low rates won’t last forever. An experienced mortgage broker like myself, Darren Robinson, can help you secure those low-interest rates before they go up. I’m just a phone call away and I welcome any questions. Understanding how mortgages work, what lenders look at, how to increase your credit score, whatever your questions might be give me a call at 705-315-0516, and let’s chat.

One final note: Happy New Year! I wish you joy and happiness in 2022 along with healthy financial wellbeing too!