A major bank is forecasting a drastic drop in home sales in one province, but anecdotal broker evidence may prove that some of the lost business can be made up through refinances.
“I’ve seen a tremendous uptick in business for refinances; these rates are pulling a lot of people out of the woodwork that are in both in and not in the oil patch industry,” Alberta-based Marc Crossman of Dominion Lending Centres
Mortgage Mentors told MortgageBrokerNews.ca. “The number of inquiries we’re getting since the start of the year is two- or three-fold.”
That will likely be welcome news to other industry players operating in the oil-rich province following a Royal Bank
Prediction that sales in Alberta are expected to drop 16 per cent in 2015, which the bank attributes to sagging oil prices.
It estimates an average oil price of US$53 per barrel in 2015, down from a previous estimation of US$65.
“The downgraded oil price assumptions for 2015 are seen to weigh more significantly on economic growth and housing demand in Alberta, Saskatchewan, and Newfoundland and Labrador,” RBC wrote in its Canadian Housing Forecast update, published Monday.
And according to Crossman, the drop in oil prices has already had a major effect on the real estate and mortgage industries.
“I found the change in oil price, I was surprised how quickly it (had an effect); I spoke to a few people in and around the industry; mechanics, welders, some of the trades and some of the owners and managers of shops and they were saying that it was almost immediate,” he said. Companies were cutting millions of dollars in planned work; they were wanting to cut deals that were already in production or jobs that were already in production. I thought it would take weeks or months but it seems pretty immediate.”
According to CAAMP
’s annual fall report, released in November, about 1.35 million mortgage borrowers renewed or refinanced mortgages in 2014, with 1.05 signing up for loans at lower interest rates.