Overnight Index Swaps

There are no shortage of predictions as to how when rate cuts start and how deep they go but the most objective predictor is typically “The Market”. Overnight Index Swaps (OIS) essentially trade debts and equity at an agreed upon rate of interest. But in doing so, they’re predicting or anticipating the next moves of the Bank of Canada (BoC) to set those rates. And the path the OIS market is predicting for the BoC right now is 0.25% rate cuts in:

  • April
  • June
  • September
  • October
  • December

That’s a total of 1.25% off the BoC overnight rate by the end of 2024. Which is excellent news for the housing market. And though we never want to get too far ahead of ourselves, some outfits like Capital Economics are calling for as much as a 2% cut by the BoC.

We talk a lot about pent up demand for housing and how it’s expected to come off the sidelines as we gain confidence in/start to see interest rate cuts. Ipsos conducted a poll in December that shows just how much prospective home buyers and sellers decisions are impacted by higher interest rates. 73% of those surveyed said “higher interest rates have me on the sidelines for now and I won’t buy or sell as a result.” Everyone in Real Estate and Mortgages have talked about pent-up demand over the last 18 months. This survey puts an actual number that shows the significance of just how much of an impact these higher rates have had. But what happens as we start to see rate cuts in the coming months? Certainly a share of that 73% will find more confidence to enter the market. The window to buy without significant competition may be closing and closing quickly.

Which leads us into spring and the market we might expect. 2023 saw a spring market that was stronger than the 10 year average. And that was with fixed interest rates that were still approaching 5%. Most borrowers opted for shorter term fixed rates in the ~4.85% range in the spring of 2023. And where do we sit today? On average, fixed rates of all terms are about 0.5% higher today than the same time last year. But as we get closer to the inevitable first cuts, it’s likely that fixed interest rates will see some more downward pressure. And it is quite possible that we will see the same levels we saw one year ago.

So where does all this leave us? “The Market” (OIS) is almost never wrong about the direction of rates. And while they’re not as good with timing or magnitude of moves, it’s becoming increasingly clear that the next move(s) are going to be downward. And as confidence grows into certainty, it’s fair to expect a good sized portion of that 73% to wade into the market and test the waters. The prescription here is to get prepared. Though there is much less urgency with rate holds in a declining rate market, there’s much higher urgency in having a quality pre-approval and knowing numbers and limits. Because when things turn, they turn quickly.

And hey – if you want to grab a coffee and talk  Reach out and let’s connect!

All the best in 2024!

Big White Real Estate Market Update – January

We are already one month into 2019 and Big White’s Real Estate market is booming! The demand for property at Big White is steadily rising and people from all over the world are now not just renting, but buying their dream vacation/investment property. Investors are jumping in the market and receiving more of a return than ever with Big White Ski Resort now open for all four seasons, providing family fun all year round!

Keeping up with the high demand for housing, Big White’s developments are growing and don’t seem to be slowing down. Lots make up 25% of the current listings at Big White Ski Resort. Monashee Ridge offers lots starting at $139,000 and lot + cabin packages starting at $469,000! A ski-in/ski-out location nestled in the trees off of Serwa’s Run, makes it a great investment or a fantastic family cabin.

Not only are lot listings increasing with all the new developments,  Big White is seeing an overall increase of listings compared to this time last year, up from 76 active listings in January 2018 to 116 active listings in January of this year. From single family mountain homes, townhomes, and condos, there really is a type of property for everyone!

Whether you want to live at Big White full time (yes, there even is a school), or your focus is more on income potential, the Big White Real Estate market is one you can’t pass up!

Don’t you want to LIVE WHERE YOU PLAY!?