Is a 5% mortgage rate too high? Is there really a housing crisis? Are we blind to history?

These are 3 questions we will try to help you understand in this short movie.

For the last 5 or 6 months, house prices have been in decline, but then, in September, prices have bounced back with a 3.1% increase compared with the previous month.

Why did the average price come back up? We've been looking at mortgage rates getting to 5% and it seems to many people that the world is coming to an end. Is 5% really that high a mortgage rate?

As mortgage rates increased, average house prices were declining as buyers were sitting on the sidelines, concerned about paying 3.5% or 4% for their mortgage.

To put this in perspective, the average mortgage rate in Canada over the last 40 years is about 7%, so 5% can be considered a bargain.

Back around 2008 and 2009 we saw a financial crisis, where mortgage rates dropped to historic lows of 2 and 3%, and these lasted for quite a while, where people expected to get these great rates.

So, with current rates above 5%, are we really in a mortgage crisis, or is it more of a bank failure problem, where mortgage rates were left too low for too long? With good credit, someone could have got a mortgage rate under 1%!

Rates reached these lows and remained there for 12 years, and then there was a failure to see the inflation coming in 2022 and the Bank of Canada told us that inflation was transitory, right!

It looks like we waited too long to make changes and we are now victims of what we have created, we had a very good market pre-pandemic, and then afterwards failed to recognize obvious problems coming down the pipe.

Are we really in a housing crisis... we think not, 5% is still a great mortgage rate.