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Canadian real estate is kind of like Chucky in Child’s Play. No matter how you try to kill him, the little rascal keeps coming back.

The housing balloon, bubble or whatever you want to call it, finally popped last year, but next Monday, we could see its comeback accelerate. That’s when the Canadian Real Estate Association releases its April resale data. If you’re a real estate watcher, you’ll want to pop some corn for this one. April national home sales and prices could shift into high gear.

McLister: This week’s lowest fixed and variable mortgage rates in Canada

If that happens, sweat beads might form on those home shoppers feeling urgency. National average home values had never had a 25-per-cent correction – until this year. If you blinked, you probably missed it. That’s a problem for the countless Canadians planning to buy during this dip. So what do you do if you’re one of them and the boat has already left the dock?

If you’re well-qualified and can afford to buy, swim to it

In Canada Mortgage and Housing Corp.’s latest mortgage consumer survey, 26 per cent of homeowners purchased sooner than they expected to beat rising rates. Another 5 per cent had to delay their purchases because of rate-related affordability concerns.

It’s tough to say, but a corresponding number could be similarly motivated to buy before prices rise further to avoid higher monthly payments, higher down payments and higher lifetime interest costs.

As of March 31, average home prices were already 12 per cent off the bottom, according to the Canadian Real Estate Association. That boosted theoretical mortgage payments by $376 a month (almost 12 per cent) for folks buying the average home with the leading five-year fixed rate and the minimum down payment.

If average prices rise another 5 per cent, that will tack on an additional $174 a month – or 5 per cent. Other things equal, the more that buyers flood into markets with scant listings, the more that payment risk will be a thing.

The historic drop in values and the prospect of falling rates, which could boost demand further, is why FOMO, that cliché acronym meaning fear of missing out, is making a comeback.

Is FOMO merely a siren waiting to lure in buyers with a short-term price spike – to mortgage payments many can’t afford? Or is it a valuable instinct that’ll save this year’s buyers from paying even more, as it did in summer of 2020?

I’m no Soothsayer Sally, but one thing is clear. Canada’s short-term to medium-term housing fundamentals are legit. Record household formation, deficient housing supply, income growth, improving sentiment, and the prospect of falling rates are brewing a bullish concoction.

Rising unemployment and stricter mortgage rules will dilute some of that buying interest – thank you, banking regulator – but demand should remain potent enough to keep values at least going sideways till the economic downturn passes.

I hate to say this, with the Bank of Canada trying to deflate the economy and mortgage regulators trying to bolster financial stability, but real estate proponents have a saying: The best time to buy is any time. Well, to those buyers who are well-qualified and risk-tolerant, it is now officially any time.

Waiting for rates to drop

Rate cut cycles are like floating down the Niagara River in a barrel. Everything’s nice and calm and then kerplop, you go off the edge.

The time is approaching when recession or some global event pushes mortgage rates off the edge. We just don’t know how long rates will drift until we get there.

At the moment, fixed rates are consolidating near multiweek lows. Consolidation like this usually precedes a big move in one direction or the other. I’ll take the under.

In the rate survey, the only tweaks to leading rates this week were a few five- to 10-basis-point changes to default-insured mortgage offerings. (A basis point is one hundredth of a percentage point.)

The lowest uninsured rates saw zero changes since my last report.

Regarding variable rates, markets still expect the Bank of Canada’s next move to be a cut. Accurate or not, derivatives pricing in the bond market still implies the first prime rate drop will come by December.

Rates are as of May 11, 2023, from providers that advertise rates online and lend in at least nine provinces. Insured rates apply to those buying with less than a 20 per cent down payment, or those switching a pre-existing insured mortgage to a new lender. Uninsured rates apply to refinances and purchases over $1-million and may include applicable lender rate premiums. For providers whose rates vary by province, their highest rate is shown.

Robert McLister is an interest rate analyst, mortgage strategist and editor of You can follow him on Twitter at @RobMcLister.

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