Lower Rates again! Is it time to buy?

I was a mortgage broker a little over 5 years ago and personally experienced that end of these crazy low rates. Everyone was scrambling to refinance and get pre approvals locked in, business was good. Now we are seeing a competitive shift once again towards offering the best rate.  What does this mean for you as a buyer? Now you can afford another $50,000 on a mortgage! Seems great right? Realistically as a buyer in any range you should still stick with the price range you were in with the higher interest rate. This will avoid a bad situation in 5 years when your mortgage comes up for renewal and the rates may be higher. What this does mean for you is that you should get a rate locked in and log on to www.viewpoint.ca to find your next home. For you sellers, call today and get your house listed asap to avoid a little competition from the neighbours. 

Here a great article from The Globe and Mail about how the rates are already effecting our market;


Canada’s housing market is already seeing the impact of falling interest rates, with nearly half of Canadians telling a new survey that they are planning to buy a home in the next five years and more than 15 per cent saying cheaper mortgage rates will allow them to make the purchase sooner than expected.

Younger Canadians, who are struggling with far more debt than their parents did at the same age, are the most likely to respond to falling rates. More than a fifth of millennials told a Bank of Montreal home buyers survey that they have shortened their time-frame for buying a home because of lower rates and 75 per cent said they were planning on making a purchase within the next five years.

Regionally, the demand among buyers is strongest in Ontario and Atlantic Canada, where the combination of low interest rates and cheaper oil prices are poised to put more money in the pockets of consumers. Nearly a fifth of residents told pollsters that they would speed up their home purchase because of low interest rates.

In contrast, just 13 per cent of residents in Quebec and 12 per cent in Alberta said lower rates were having an impact on their buying decisions. Plunging oil prices have made Alberta consumers more cautious about jumping into the housing market this year, while a high vacancy rates and a glut of newly built condos in Quebec is pushing more potential first-time buyers into the rental market, according to Desjardins Group.

Mortgage rates have been falling since last week, when the Bank of Canada shocked markets by cutting interest rates by 25 basis points ( a basis point is a hundredth of 1 per cent.) Lenders soon followed, with major banks dropping five-year fixed rates mortgages to as low as 2.84 per cent and this week cutting their prime rates by 15 basis points, which quickly pushed variable-rate mortgages among the Big Six banks as low as 2.25 per cent.

On Friday, BMO said it was lowering rates on several of its fixed mortgages. The rate on a 10-year mortgage, for instance, fell 85 basis points to 3.84 per cent.

Many analysts had predicted that interest rates would rise this year, so the central bank’s unexpected decision to slash rates is widely expected to reignite the country’s cooling housing market. “Given the negative impact of lower oil prices on the Canadian economy, interest rates are likely to remain low for some time, supporting home sales, especially in Vancouver and Toronto where affordability is an issue”, said BMO senior economist Sal Guatieri.

But with mortgage rates falling only slightly and more Canadians telling the BMO survey they were planning to use lower rates to pay down their debt rather than load up on new ones, cheaper rates are expected to have a modest impact on the housing market.

Shortly before the Bank of Canada cut its target overnight lending rate, more than half of Canadians told an earlier BMO poll that cheaper rates would make them more likely to buy a home, though most said the drop would need to be 10 per cent or more to have a significant impact on their buying plans.