The Cost of Fence Sitting


One of the most difficult things to do when thinking about buying a home is timing the market. Are prices going up, or down? Are interest rates going up, or down?

There can be a high price to pay for sitting on the fence when it comes to these decisions. Inflation alone makes us poorer every day, so even if real estate prices or mortgage rates aren’t going up, the value of every dollar we have goes down over time.

When it comes to interest rates there is a direct correlation with the performance of the stock market that not everyone fully understands.

In the past four weeks bond yields have gone up 35 basis points due to some improvement in the stock market. When the stock market goes up, bonds have to yield higher in order to attract investors. When they do this increases the cost of borrowing to mortgage lenders, who in turn raise their rates at the consumer level.

What does this mean to you? Higher interest rates, which can make it harder to qualify for a mortgage, and perhaps an inability to pay as much as you would like for a place, making it harder to buy your ideal property.

There are two things you can do about this:

1) Get a mortgage pre-approval as soon as you can to lock-in a rate for 120 days.

2) Get a great real estate agent to help you find a place to buy in the next 60–90 days. (Let us know if you want a referral to a fantastic agent – we only work with the best)

We’re here to serve, so if you have questions or would like any clarification, feel free to email a mortgage broker or call us. We have some additional capacity for the fall so our turnaround times are very good right now and we’re eager to work with great buyers.

We hate to see people pay more than they need to for a mortgage, so we hope this is helpful advice.

President of First Foundation Residential Mortgages and First Foundation Insurance. Live in Edmonton but cheer for the Riders. I have lots of kids. Follow me on Twitter @gordmccallum

Learn more about Gordon McCallum