The Bank of Canada has now raised the mortgage interest rates twice in two months: July and August 2017. The Bank of Canada rate has gone from 0.5%, to 0.75% and now one full percent.
Mortgage Lender rates have, of course, kept pace with these increases. This means that 5-yr locked-in mortgage interest rates which were normally around 2.7% are now around 3.2%.
That 1/2% increase means approximately $80 per month more on a mortgage of an average house in Winnipeg (value pegged at $315,000 in July 2017). If House and Condo buyers may be tempted to wait for interest rates to drop again before taking the plunge, here is a solid reason why buying sooner, rather than later, may be a better course of action. Rates are not likely to come back down soon. In fact, when viewed over a longer history, we can see that they may actually still go up.
Lets take a look at some historical data. Many buyers, especially First Time Buyers, might just look back over the past year and see that the Bank Rate sat at 0.5% the entire time.
Seen in this context, an observer can be forgiven for concluding that after the recent increases, now might be a ‘bad time to buy’ . But lets look back a few years.
In this context, we see that the 0.5% rate was really just a recent phenomenon. Yes, it made for a “Fantastic” time to buy a home. Our recent increase merely brought us back to the 1% level. Lets look a little further back, going to the 1990’s.
Even if we ignore the 10% rate from the early 1990’s, we can see that a rate of 4-6% was common for many years. This puts the 1% rate we have now into a better light.
So what should a potential Home Buyer do?
First, contact a real estate agent who can recommend a suitable lender. In fact, simply follow these 6 steps to assuring your home buying success.
One of the steps will include being pre-approved by a lender who offers a rate-lock for 90-120 days. This feature protects the home buyer from further interest rate hikes during the time frame, while they are looking for a home.Our Latest Web-Stories Never miss an episode of our real estate podcast. Install our FREE Podcast App available on iOS and Android. For your Apple Devices, click here to install our iOS App. For your Android Devices, click here to install our Android App. Check my videos on Youtube