Managing Uncertainty in Today’s Mortgage Market

Control What You Can Control

Feeling hesitant about entering the housing market today due to political or economic uncertainty is understandable. The landscape can seem unpredictable—interest rates shift, housing supply fluctuates, tariff news hits the headlines and policies change. As a mortgage broker, we see this uncertainty every day. But here’s the truth: while there is much beyond your control, mastering the factors that you can control is what will make the biggest difference in your journey to homeownership.

Focus on What’s Within Your Power

A strong financial foundation is the key to securing the best possible mortgage and housing outcome. Some may feel like there is nothing they can do about the market challenges and sit by idly while others prepare. While the challenges are daunting, solutions are available. Instead of fixating on external uncertainties, take strategic action on these core areas:

1. Strengthen Your Credit Score

Lenders rely heavily on your credit score when assessing your mortgage application. The lowest mortgage rates are only available to the borrowers with good credit scores. A good credit score is generally considered to be greater than 680. You can get your credit score for free from either Equifax or Transunion, the two largest credit reporting agencies in Canada. Some banks also provide them for free as do some third-party credit companies like Borrowell or Loans Canada.

You can start improving your credit score today by:

• Paying bills on time.
• Reducing outstanding debt.
• Keeping credit utilization low (aim for under 30%).
• Checking your credit report for errors and correcting them.

2. Master Your Budget & Spending Habits

A clear understanding of your financial habits is crucial when preparing for homeownership. Economic uncertainty might tempt you to defer planning, but creating a disciplined budget now can give you a competitive edge.

• Track your expenses - Use apps or spreadsheets to monitor where your money goes each month. Identify areas where you can cut back, such as dining out or subscriptions.
• Build a housing-focused budget - Factor in future homeownership costs like mortgage payments, property taxes, insurance, and maintenance. A general rule is to keep housing costs below 39% of your gross monthly income (known as the Gross Debt Service ratio in Canada).
• Stress-test your budget - With interest rates subject to change, calculate affordability based on higher rates to ensure you understand mortgage affordability under different scenarios.

A well-managed budget not only helps you save but also proves to lenders that you’re financially responsible, which is critical in a volatile market.

3. Boost Your Down Payment Savings

Saving for a down payment takes time, but the more you put down, the less you need to borrow and the better your mortgage terms. The minimum down payment for a new purchase is 5% for homes under $500,000, plus 10% for the value of a home between $500,000 and $1.5 million. Properties over $1.5 million require at least 20%.

The First-Home Savings Account (FHSA) is a fantastic way to save money for a down payment. You get a tax deduction as you save and there is no tax charge when you withdraw the money for buying your first home. It is a win-win. You can also look into tax-free savings accounts (TFSAs) and Registered Retirement Savings Plan (RRSP) withdrawal programs that can help optimize your savings strategy.

4. Your Knowledge of Homeownership

Owning a home is a significant commitment that goes beyond monthly mortgage payments. Understanding the full scope of homeownership can prevent surprises and help you make informed decisions.

• Research ongoing costs - Factor in property taxes, utilities, maintenance, and condo fees (if applicable). For example, older homes may require costly repairs, while condos come with monthly fees.
• Learn about your market - Study local real estate trends in your desired area. Are prices stable, or are they likely to rise or fall? Knowledge of market dynamics can help you time your purchase strategically.
• Prepare for unexpected changes - Economic uncertainty can affect job security or income. Build an emergency fund (ideally 3-6 months of expenses) to protect yourself from financial shocks.

By understanding the demands of homeownership, you’ll be better equipped to choose a property that aligns with your lifestyle and financial goals.

5. Your Understanding of the Mortgage Process

Navigating the mortgage process can feel daunting, but taking time to understand it now can save you stress and money later.

• Know your mortgage options - Fixed-rate mortgages offer stability, while variable-rate mortgages may save money if rates drop. Discuss with your mortgage broker which product aligns with your risk tolerance and market conditions.
• Get pre-approved - A mortgage pre-approval shows sellers you’re serious and helps you understand your borrowing capacity. It’s valid for 90-120 days and can often be renewed.
• Understand affordability - Lenders use ratios like the Total Debt Service (TDS) ratio (capped at 44% of gross income, including all debts) to assess affordability. Calculate yours in advance to avoid surprises. You can calculate your debt ratios here - frankmortgage.com/gds-tds-calculator.

Knowledge of the mortgage process empowers you to act quickly when the right opportunity arises, even in a shifting economic landscape.

6. Affordability & Market Research

Even in uncertain times, opportunities exist. Research neighborhoods, property values, and local market trends to identify homes within your budget. The old idea of a starter home resonates today for many affordability-challenged market entrants. Consider smaller communities outside the city or smaller homes that allow you to afford a place you can call your own.

Having a good understanding of what you can afford will position you to better tackle the market when you are ready and not waste time or money looking at homes and neighbourhoods you cannot afford. Stay informed of market trends and be open to adjusting your expectations. Consulting with an experienced mortgage broker can help you analyze different scenarios and create a financial strategy tailored to your situation.

Why Act Now?

Uncertainty can be paralyzing, but waiting for the “right time” often means missing opportunities. The Canadian housing market, while influenced by external factors, rewards those who are prepared. By improving your credit, managing your budget, saving diligently, and educating yourself, you’re not just reacting to the market—you’re shaping your future in it. A strong financial foundation gives you the power to act when the right home comes along, regardless of economic or political noise.

After more than 30 years in this market we are reminded during a market downturn that “the most profitable opportunities often arise in times of fear and uncertainty, when others are unwilling to act” (credit to Howard Marks for that quote).

The Bottom Line

Political and economic uncertainty can create hesitation—but waiting indefinitely won’t make things more certain. By taking action on the factors within your control, you position yourself for success in the housing market regardless of external conditions.

When you’re ready, working with us at Frank Mortgage will give you expert guidance on structuring your mortgage plan, securing the best rates, and maximizing affordability. You don’t need to wait for others to signal that it is time for you to enter the market. Only you can decide that. Focus on what you can control today so you can build the future you want.

Are you ready to take the first steps toward homeownership? Reach out to us at Frank Mortgage to get started – 1-888-850-1337 or www.frankmortgage.com.