Today I wanted to address a few big news items in Calgary that recently came about.
First, oil prices appear to be on the rebound after OPEC’s commitment to reduce production by about 1.2 million barrels per day. The second item is the big change in mortgage lending rules causing big banks to raise their mortgage rates this week. Both of these events are very important in real estate and will have an impact in Calgary going forward.
The news in oil has everyone in Calgary talking, and an OPEC deal to reduce oil for the first time in eight years is positive news for Alberta. The price of oil jumped to more than $51 per barrel and the positive price is encouraging in Calgary right now. Many people who lost jobs in the oil sector in the last two years are feeling very optimistic today because higher prices mean more capital projects, meaning more jobs. As a result of the strengthening job sector, we expect prices for resale and new construction homes to increase over the next couple of months.
The other big news—banks increasing rates—are on mortgages with longer amortization periods and all rental properties. Starting December 1st, all mortgages of more than 25 years will cost borrowers an extra 10 basis points, and mortgages on rental properties will go up by 25 basis points, regardless of the amortization period. This will have the biggest impact on first-time buyers and investors since they typically take longer amortization periods on loans.
If you have any questions about these newsworthy events or how they affect real estate, give me a call or send me an email. I’d be happy to help in any way I can.