Are you shopping for a mortgage these days? If so, you’ve likely already started thinking about one of the biggest questions you’ll struggle with as a homebuyer: do I go with a fixed or variable mortgage rate? While it might be tempting to go with the lowest rate out there, for the last 5 years most Canadians have passed on the sprinkles and opted for the plain vanilla 5-year fixed plan instead. This year has been different, though, with over 51% of Canadians choosing variable rates over fixed, hedging their bets on not seeing a Bank of Canada interest rate hike until end of 2022.

In response to Scotiabank Economist Derek Holt predicting the Bank of Canada will need to hike rates as many as eight times by the end of 2023, bringing the benchmark rate to 2.25 per cent, some think that going with a variable rate at this point is rolling the dice.

Obviously, the question of which one to choose is a complicated one (almost as taxing as choosing between ice-cream flavors), with each homebuyer’s situation and circumstances being unique to them. If you’re thinking of selling or switching to a new property within the term of your mortgage, then maybe a variable rate mortgage makes more sense (the penalty for breaking your mortgage is generally greater with fixed, with variable mortgage rates often requiring you to pay only three months’ worth of interest to get out of your contract). On the other hand, if you’re risk averse and like to know exactly what you’re getting, then fixed is a safe bet choice.

As with most choices in life, there are pros and cons to choosing fixed or variable. However, many agree that one of the riskiest times to choose a variable rate is immediately before an anticipated tightening cycle of monetary policy, simply because there are more unknowns floating around.

The main point to keep in mind: take the time to carefully assess your own personal situation and goals, learn more about what’s happening in the market now and what experts say might happen in the near future, and then consider each option carefully based on your unique circumstances.

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It’s a fact, AI is integrating into our daily lives more than ever. There are many proponents of artificial intelligence, as AI helps augment the work we do and improves the efficiency of our personal life. Opening your phone with face ID, using Grammarly to spell check emails, smart home devices and yes, Netflix, are all powered by AI to deliver a tailored, custom experience. When used correctly, AI frees up our time to focus more on things that computers don’t do well, like creativity and empathy-related exercises. So all pluses, right?

Artificial Intelligence was first featured in “Metropolis” in 1927

It’s no wonder then that AI has made its way into the real estate sector. By means of algorithms, machine learning and AI technologies, artificial intelligence can help to ensure better investment decisions based on hard data. At least that’s the dream. In comes Zillow (https://www.zillow.com/), an American online real estate marketplace company founded in 2006, that launched a service that uses artificial intelligence to estimate the value of homes. In February 2021, Zillow announced a new “Zestimate” option that was essentially a cash offer from the company to purchase property, providing clients the convenience of selling their property in just a few clicks, which would ultimately minimize interactions with others especially during the height of the pandemic. To accomplish this, Zillow compiled algorithms with machine learning, plus lots of data to look at current/past/future housing prices in an effort to accurately predict the value of a home. Fast-forward 8 months later and Zillow is now shutting down that part of the business.

In a statement from Zillow, CEO Rich Barton says: “We’ve determined the unpredictability in forecasting home prices far exceeds what we anticipated and continuing to scale Zillow Offers would result in too much earnings and balance-sheet volatility.” In other words, getting the algorithm right proved more difficult than they had anticipated.

Of course, this doesn’t mean the end for AI in the real estate sector. There are still countless ways that AI is being used and no doubt this will continue to become more common place moving forward. But predicting house prices now or in the future isn’t something that AI can easily tackle. There are countless unquantifiable aspects of putting a price tag on a home, and these factors vary from person to person, neighborhood to neighborhood, which make it immensely challenging for AI to get right.

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