Big news!
The government is no longer stress-testing anyone renewing their mortgage. In my opinion, this is great news for a couple of reasons. However, I also want to share what this could mean for our real estate market here in Abbotsford and the Fraser Valley – particularly inventory and ultimately pricing!
Why This Is Great:
1. The Stress Test No Longer Makes Sense: Why stress test someone at two points higher than today’s rates when we know that rates are expected to go lower, not higher, over the next 12+ months? It’s an unnecessary hurdle, and removing it just makes sense for homeowners in Abbotsford and across the Fraser Valley.
2. Boosting Competition: If you renew with your existing lender, you won’t be stress-tested, but if you switch to a new one, you would be. By leveling the playing field, the government is encouraging competition, which is always a win for us consumers. More competition means you can negotiate a better rate! This is particularly good news for buyers and sellers in the Fraser Valley real estate market.
But Here’s What I Think Will Happen…
This change is another factor that will reduce supply in the Abbotsford and Fraser Valley housing market. Many homeowners who locked in at those record-low COVID rates are coming up for renewal in 2025 and 2026. Before this announcement, there was an expectation that some people wouldn’t qualify at today’s higher rates and would be forced to list their properties, which would have increased supply.
And This Will Impact Prices!
Two things help keep prices down: higher interest rates and higher inventory. We know where rates are headed (down), and while the government says inventory is coming through new builds, the reality is quite the opposite. There’s been a 22% decline in new housing starts in regions like the Fraser Valley.
With this change further reducing the potential inventory, all signs point to prices in Abbotsford and the Fraser Valley stabilizing and eventually appreciating in 2025.
So, if you’ve been trying to time the market (even though that’s never the best strategy), the timing might just be now, especially for those eyeing Fraser Valley real estate: https://www.primepropertygroup.ca/about/contact/
