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Oakville & Mississauga Real Estate: Mortgage Rates, times they are a changing

April 28, 2010

The Royal Bank of Canada kicked off another round of mortgage rate increases Monday, just days after the Bank of Canada’s stern warning that higher interest rates are on the way.

RBC said it will increase interest rates on mortgages with terms from six months to 10 years.

TD Canada Trust followed suit with a similar announcement of mortgage rate increases hours later. These latest interest rate increases mark the third time in the last month that major Canadian banks have hiked mortgage rates for home owners.

“It’s not a big surprise. The market is getting more aggressive about the prospect of the Bank of Canada raising interest rates. Now it seems the market is expecting even more aggressive interest rates increases than it was last week,” said Benjamin Tal, senior economist at CIBC World Markets.

Just last week, the Bank of Canada said that the economy is growing more quickly than projected. BOC governor Mark Carney also stated that the time for historic low interest rates has passed. These latest mortgage rate changes at RBC and TD are said to take effect next Tuesday.

Just today I read that a recent poll published by Bloomberg.com that said:

CMHC. said Monday that 81% of recent homebuyers surveyed were “comfortable” with the level of their mortgage debt.

The survey also found that more than two-thirds of respondents plan to pay off their mortgage early. Government-owned CMHC released the result of its survey of 2,500 active mortgage users in an e-mailed statement.

OK, so here’s my quick two cents:

First, are you comfortable with your level of debt? If yes, will you still answer the same when in a couple years time when resale home values have dropped and mortgage rates are climbing? Many lenders have increased their rates as much as 1% already and there is now talk of the Bank of Canada raising the prime rate significantly over the next year.

If you have just bought a home or condo in Oakville,  I hope you were working with people that advised you to consider the realities of where interest rates are right now or were 6 months ago and where they are headed.  Buying for long term affordability is so important right now. It’s great to see an appreciation on the value of your current home or condo, but more important is considering what you are buying as an alternative.

That $500,000 townhouse may be affordable today, but what happens in a couple years if mortgage rates have strained your budget and that $500,000 townhome is only worth $400,000?

If you’re still in the hunt for a new home or condo in Oakville or Mississauga, you don’t have to break the bank over mortgage rates.  One of the benefits of my real estate services is no-strings access to an established network of mortgage brokers that I work with that can save you a lot of money in the long run.

If you would like to have a no-strings, no gimmick conversation about your current real estate situation call or email me.

Cheers,

Ryan

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One Comment leave one →
  1. June 30, 2010 3:26 am

    Interesting real estate blog. I have bookmarked for future reference. Hope to see such good things again.

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