Is the window of opportunity closing for home buyers? 

The news report today quoted that on average, for every $100 dollars that Canadians earn, they owe $148. So what does this mean to us? The Canadian government may have an obligation to raise the interest rates, in order to curb spending. These mortgage rates we have at record lows may be disappearing faster than Canada anticipated. We found a great table on Can Equity’s website to view Historical Mortgage Rates. You will see what an opportunity we are in:

http://www.canequity.com/mortgage_rate_history.stm

Note** Between 2000 and 2004, we were in strong markets and the interest rates were still relatively higher than what they are now. 

Let’s put this into perspective:

Today, you get a mortgage of $250,000 and the bank gives you a 3.85% interest rate. In 5 years you will spend $44,750 on interest. The same mortgage of $250,000 at an interest rate of 5.85% (which historically is still pretty good!) will cost you $68,750 in interest. That is a difference of $24,000. In other words 9.6% of your mortgage value. If you are apprehensive about house values going down( IF they do), but you have a great mortgage rate, your home can lose 9.6% of its value and you will be exactly where you would have been if you delayed buying and interest rates went up. And if home values don’t go down, think of how far ahead you will be! 

Opportunity window number 2: In winter markets Real Estate sales are naturally slow. Come February and March, real estate sales increase, buyers come out of hibernation and there becomes more competition for the properties listed for sale. The advantage right now is that you can take more time to negotiate an offer, and perhaps with the lack of activity of listed properties the negotiations may go in your favour.

Real Estate is a BIG purchase and a BIG commitment. If you are ready, and you do want to make the commitment, it may be a good time to get a great deal with a fantastic mortgage rate. But do remember “Low rates today do not necessarily mean low rates tomorrow.” – Mark Carney Bank or Canada Governor.  Buy something you can afford for years to come!

The Axfords