Since December 2018 we’ve seen 5 year fixed rates drop by more than 1% – this may seem insignificant but that’s a 25% drop in rates in just 6 months.  For homebuyers with 20% down, taking a 30 Year amortization that’s a drop from December high of 3.99% to current low of 2.89%.  That drops the carrying cost of your mortgage from $475/month per $100,000 borrowed to $415/month per $100,000 borrowed.  Although the true cost of buying a home has changed significantly over this period, we have not seen a change to the rate that banks use to stress test mortgage qualification, and thus the rate drops have not impacted how much buyers can borrow or home prices yet. Budgets therefor remain the same, it just makes owning a home a little more affordable today vs 6 months ago.  If we continue to see rates drop, we may see banks change the qualifying rate, and if that happens you’ll see an increase in buyer budgets which may trigger an increase in real estate prices across the GTA.

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