Home sales activity in Canada came up short of the record for the month of April and new listings continued to climb, according to statistics released by The Canadian Real Estate Association (CREA).
Residential sales activity via the Multiple Listing Service® (MLS®) Systems of Canadian real estate Boards numbered 52,042 units in April 2010. This is less than one per cent short of the record for national sales activity during the month of April, which was set in 2007. Compared to April 2009, national activity was up 20 per cent.
Seasonally adjusted national home sales activity slipped 2.6 per cent from the previous month, and now stands 6.8 per cent below the peak reached in December 2009. More than half of the decline in activity over the first four months of 2010 from in British Columbia, while activity in Ontario and Quebec remains at or near record levels.
“The easing trend in national sales activity masks a rising trend in a number of major markets,” said CREA President Georges Pahud. “Real estate is local, so buyers and sellers should engage the services of a REALTOR® for knowledge about housing market trends in their market.”
Some 99,901 homes were newly listed for sale on Canadian MLS® Systems in April 2010, surpassing the previous record for the month of April set in 2008 by six-tenths of one per cent. A total of 236,397 residential properties were listed for sale on Boards’ MLS® Systems at the end of April 2010, down 1.9 per cent from levels one year earlier.
As for the national average price of homes sold via Canadian MLS® Systems, that figure rose 12.2 per cent over this time last year. This is a smaller increase compared to those recorded over the past eight months. Bucking the national trend, price gains continue to increase in a number of major markets in Alberta, Ontario and Quebec.
With last year’s string of downwardly skewed average price values having now mostly passed, and with activity in British Columbia’s lower mainland having settled down, year-over-year national average price comparisons are coming back into line with changes in the national weighted average price.
The weighted average price compensates for changes in provincial sales activity by taking into account provincial proportions of privately owned housing stock. It climbed 11.3 per cent on a year-over-year basis in April 2010. Similarly, the residential average price in Canada’s major markets climbed 12.9 per cent year-over-year in April, while the weighted major market average price rose 12.1 per cent.
The actual (not seasonally adjusted) number of months of inventory stood at 4.5 months in April 2010. This is down from levels one year ago (5.6 months) and April 2008 (4.7 months), but up compared to April levels from 2004 through 2007. The number of months of inventory is the number of months it would take to sell current inventories at the current rate of sales activity.
On a seasonally adjusted basis, months of inventory stood at 5.3 months in April, the highest level since last May.
“Next month will mark the passage of one year since the national average price rebounded from the recessionary trough to return to the pre-recession peak, so the rise in the national average price is expected to be more subdued next month,” said CREA Chief Economist Gregory Klump. “The national average price could potentially be skewed higher over the next couple of months if buyers of higher priced homes in Ontario and British Columbia move their purchase decision forward to beat the introduction of the HST in July.”
PLEASE NOTE: The information contained in this news release combines both major market and national MLS® sales information from the previous month. The Canadian Real Estate Association has previously released these separately.
CREA cautions that average price information can be useful in establishing trends over time, but does not indicate actual prices in centres comprised of widely divergent neighborhoods or account for price differential between geographic areas. Statistical information contained in this report includes all housing types.
MLS® is a co-operative marketing system used only by Canada’s real estate Boards to ensure maximum exposure of properties listed for sale.
The Canadian Real Estate Association (CREA) is one of Canada’s largest single-industry trade associations, representing more than 96,000 REALTORS® working through more than 100 real estate Boards and Associations.
Further information can be found at www.crea.ca.
“Copyright Canadian Real Estate Association. Reprinted with permission.”
Friday, May 14, 2010
Monday, April 26, 2010
BC Real Estate Association Encourages Housing Affordability: Urges Government to Reduce Shelter Taxes
The British Columbia Real Estate Association (BCREA) is in Victoria this week to highlight to the Government of British Columbia that, with the highest home ownership costs in the country, BC is at a competitive disadvantage to attract skilled labour and professionals to the province.
“The availability of affordable housing not only dramatically impacts one’s quality of life, it also significantly impacts the ability of the province to attract the labour and talent we need to ensure future economic growth,” says BCREA President, John Tillie. “BCREA is committed to working with the provincial government to find solutions to make the purchase of a home in British Columbia as affordable as possible.”
BCREA is asking the Government of British Columbia to examine shelter taxes and take measures to encourage housing affordability and tax fairness for British Columbians. This is necessary in order to attract much‐needed skilled workers to the province. Although BC ranks as one of the four most competitive provinces in terms of sales tax, fuel tax and net property tax, high shelter taxes and housing costs serve as a deterrent for workers and companies considering relocation to BC.
Shelter taxes significantly contribute to the cost of a home purchase. A growing proportion of British Columbians have been subject the Property Transfer Tax (PTT) – originally intended as a luxury tax on high‐priced homes – since its introduction in 1987. BC families pay 12 per cent of their annual income in PTT when buying a home, a heavy burden on households. For example, a couple earning $40,000 each in taxable income pays almost three times their annual BC income tax for the privilege of buying a home, $2,880 versus $7,811. The implementation of the new Harmonized Sales Tax (HST) will add an additional tax burden on BC homebuyers, homeowners and landlords.
The government has taken some steps to lessen the tax burden on British Columbians, including competitive personal and corporate tax rates, and increasing the threshold for HST rebates for house purchases. However, the total tax burden in BC is still a heavy one – British Columbians pay at least 122 per cent more in property transfer taxes than the average buyer in Ontario, for example. With additional shelter taxes, attainable housing is becoming increasingly unrealistic for many.
Specifically, BCREA is asking government to implement the following measures:
1. Recognize significant differences in home prices across the province and implement regional rebate thresholds for new housing, which will be indexed annually
2. Index the HST rebate threshold to maintain the current percentage of tax exempt buyers – unless the threshold is indexed, as new home prices rise over time, a higher proportion of buyers will have to pay HST on new homes
3. Adjust the PTT to help restore fairness by implementing a three‐year phase‐out of the PTT, including increasing the one per cent tax threshold (from $200,000 to $500,000) starting on July 1, 2010
“Through implementing our recommended measures to enhance shelter tax equity, the provincial government can make great strides in improving housing affordability in British Columbia,” added Tillie. “BCREA encourages British Columbians to get educated and advocate for housing affordability in their community – together we can work to improve housing attainability.”
“Copyright British Columbia Real Estate Association. Reprinted with permission.”
“The availability of affordable housing not only dramatically impacts one’s quality of life, it also significantly impacts the ability of the province to attract the labour and talent we need to ensure future economic growth,” says BCREA President, John Tillie. “BCREA is committed to working with the provincial government to find solutions to make the purchase of a home in British Columbia as affordable as possible.”
BCREA is asking the Government of British Columbia to examine shelter taxes and take measures to encourage housing affordability and tax fairness for British Columbians. This is necessary in order to attract much‐needed skilled workers to the province. Although BC ranks as one of the four most competitive provinces in terms of sales tax, fuel tax and net property tax, high shelter taxes and housing costs serve as a deterrent for workers and companies considering relocation to BC.
Shelter taxes significantly contribute to the cost of a home purchase. A growing proportion of British Columbians have been subject the Property Transfer Tax (PTT) – originally intended as a luxury tax on high‐priced homes – since its introduction in 1987. BC families pay 12 per cent of their annual income in PTT when buying a home, a heavy burden on households. For example, a couple earning $40,000 each in taxable income pays almost three times their annual BC income tax for the privilege of buying a home, $2,880 versus $7,811. The implementation of the new Harmonized Sales Tax (HST) will add an additional tax burden on BC homebuyers, homeowners and landlords.
The government has taken some steps to lessen the tax burden on British Columbians, including competitive personal and corporate tax rates, and increasing the threshold for HST rebates for house purchases. However, the total tax burden in BC is still a heavy one – British Columbians pay at least 122 per cent more in property transfer taxes than the average buyer in Ontario, for example. With additional shelter taxes, attainable housing is becoming increasingly unrealistic for many.
Specifically, BCREA is asking government to implement the following measures:
1. Recognize significant differences in home prices across the province and implement regional rebate thresholds for new housing, which will be indexed annually
2. Index the HST rebate threshold to maintain the current percentage of tax exempt buyers – unless the threshold is indexed, as new home prices rise over time, a higher proportion of buyers will have to pay HST on new homes
3. Adjust the PTT to help restore fairness by implementing a three‐year phase‐out of the PTT, including increasing the one per cent tax threshold (from $200,000 to $500,000) starting on July 1, 2010
“Through implementing our recommended measures to enhance shelter tax equity, the provincial government can make great strides in improving housing affordability in British Columbia,” added Tillie. “BCREA encourages British Columbians to get educated and advocate for housing affordability in their community – together we can work to improve housing attainability.”
“Copyright British Columbia Real Estate Association. Reprinted with permission.”
Homebuyers e-Valuate Mortgage Options
The 2010 Mortgage Consumer Survey , released today by Canada Mortgage and Housing Corporation (CMHC), shows that the Internet has become an important resource for first-time homebuyers with 89 per cent indicating that they looked online for mortgage-related information, while 84 per cent researched mortgage terms and conditions before deciding on a mortgage option.
Additionally, more than two-thirds (69 per cent) of first-time homebuyers used an online calculator to compare different options when shopping for a home. As a result, 85 per cent of first-time homebuyers noted they had a good understanding of the size of mortgage they could afford before buying a home, with the average Canadian homebuyer taking 12 months to plan their purchase.
“Canadians confirmed that they take the time to do research prior to buying a home,” said Pierre Serré, CMHC Vice-President, Insurance Product and Business Development. “Informed homebuyers contribute to the continued strength of Canada’s housing system.”
The survey noted that 81 per cent of recent homebuyers indicate that they are comfortable with the level of their current mortgage debt.
More than two-thirds (68 per cent)of recent homebuyers feel there is a strong chance they will pay off their mortgage sooner than required and more than a quarter (27 per cent) have already taken steps to pay down their mortgage through lump-sum payments or through increased regular payments.
CMHC April 26, 2010
Additionally, more than two-thirds (69 per cent) of first-time homebuyers used an online calculator to compare different options when shopping for a home. As a result, 85 per cent of first-time homebuyers noted they had a good understanding of the size of mortgage they could afford before buying a home, with the average Canadian homebuyer taking 12 months to plan their purchase.
“Canadians confirmed that they take the time to do research prior to buying a home,” said Pierre Serré, CMHC Vice-President, Insurance Product and Business Development. “Informed homebuyers contribute to the continued strength of Canada’s housing system.”
The survey noted that 81 per cent of recent homebuyers indicate that they are comfortable with the level of their current mortgage debt.
More than two-thirds (68 per cent)of recent homebuyers feel there is a strong chance they will pay off their mortgage sooner than required and more than a quarter (27 per cent) have already taken steps to pay down their mortgage through lump-sum payments or through increased regular payments.
CMHC April 26, 2010
Fixed mortgage rates rising: 2nd increase in April
Royal Bank, Canada's biggest chartered bank, is raising fixed mortgage rates by 0.15 of a percentage point, effective Tuesday.
TD Canada Trust will also raise rates by between 0.15 and 0.25 percentage points on Tuesday.
The increase is the second in April for the banks and the third in less than 30 days.
Flexible rates are not affected by the increase, a Royal spokeswoman said.
The increase leaves both banks' benchmark five-year fixed rate at 6.25 per cent, up one percentage point over a month. It went up 0.25 percentage points on April 14 and 0.6 points at the end of March.
The Royal's increase matches the rise in the bank's long-term funding costs and bond yields, the spokeswoman said.
The Bank of Canada warned April 20 that the period of very low interest rates was coming to an end. Analysts expect the central bank's key rate to go up in June.
RBC said eight mortgage rates, from six-month convertible to 10-year closed, will go up, as well as the charges on two special fixed rate offers.
The one-year closed rate will be 3.8 per cent and the 10-year closed rate moves up to 7.2 per cent.
Other lenders are widely expected to raise their rates, too.
CBC News: Monday, April 26, 2010
TD Canada Trust will also raise rates by between 0.15 and 0.25 percentage points on Tuesday.
The increase is the second in April for the banks and the third in less than 30 days.
Flexible rates are not affected by the increase, a Royal spokeswoman said.
The increase leaves both banks' benchmark five-year fixed rate at 6.25 per cent, up one percentage point over a month. It went up 0.25 percentage points on April 14 and 0.6 points at the end of March.
The Royal's increase matches the rise in the bank's long-term funding costs and bond yields, the spokeswoman said.
The Bank of Canada warned April 20 that the period of very low interest rates was coming to an end. Analysts expect the central bank's key rate to go up in June.
RBC said eight mortgage rates, from six-month convertible to 10-year closed, will go up, as well as the charges on two special fixed rate offers.
The one-year closed rate will be 3.8 per cent and the 10-year closed rate moves up to 7.2 per cent.
Other lenders are widely expected to raise their rates, too.
CBC News: Monday, April 26, 2010
Bank of Canada maintains interest rates
Reiterates commitment to hold until end of second quarter of 2010
As was widely expected, the Bank of Canada held its benchmark overnight lending rate steady at 0.25 per cent at its setting on January 19th, 2010. The trend-setting Bank rate, which is set 0.25 percentage points above the overnight lending rate, remains at 0.5 per cent.
With the economic recovery under way, the Bank acknowledged that the outlook for global growth was “somewhat stronger” than it had predicted in October, but stressed that this was still very much dependent on “exceptional monetary and fiscal stimulus, as well as extraordinary measures taken to support financial systems.” The Bank did, however, remove its comment regarding “significant fragilities” in the global economy, which had featured prominently in the previous two announcements.
Economic growth in Canada turned positive in the third quarter, and is expected to have improved further in the fourth quarter, accompanied by an increase in total CPI inflation, and higher than expected core rate of inflation.
The Bank said it believes that the Canadian economy will have contracted 2.5 per cent 2009, though annual data is not yet finalized. The Bank had originally predicted a 2.4 per cent decline. The Bank also made some small changes to its forecast for this year and next. The Bank now sees economic growth of 2.9 per cent in 2010, down slightly from the 3.0 per cent projection in October.
For 2011, the forecast was upgraded to 3.5 per cent from 3.3 per cent last fall. The Bank said “the private sector should become the sole driver of domestic demand in 2011,” which is when government stimulus is set to expire.
The Bank named a number of factors supporting Canada’s economic recovery – policy support, increased confidence, improving financial conditions, global growth, and higher terms of trade. The Bank reiterated that the strong Canadian dollar and weak U.S. demand were the main drags on the Canadian economy. As a result, growth continues to be driven more by the domestic side and less by exports.
The Bank said that the profile for the recovery in Canada was still consistent with its October Monetary Policy Report, saying inflation would return to the 2 per cent target in the third quarter of 2011. Conditional on this outlook, the overnight rate can be expected to remain at its current level until the end of the second quarter of 2010.
The Bank noted that the risks to the inflation outlook remain unchanged from those outlined in the October Monetary Policy Report. Inflation could climb faster if global and domestic demand ends up being stronger than currently expected. By contrast, inflationary pressures would be held in check by a more protracted global recovery and persistent strength in the Canadian dollar.
While the Bank said it judged these risks to be roughly balanced, it noted that, since it cannot lower rates any further, the overall risk to the projection are tilted slightly to the downside.
“The Bank of Canada’s decision to leave rates on hold, until at least the second half of 2010, confirms the view that it’s still to early to even consider tapping the brakes on economic growth,” said CREA’s Chief Economist Gregory Klump. “While interest rates will eventually rise, the increases are likely to be small. The Bank recognizes that economic growth will rely on domestic demand once temporary government spending measures aimed at propping up economic growth expire. Raising interest rates too soon and by too much runs the risk of choking economic growth.”
As of January 19th, the advertised five-year conventional mortgage rate stood at 5.49 per cent. This is down 1.26 per cent from one year earlier, and stands 0.1 per cent below where it stood when the Bank made its previous interest rate announcement on December 8th.
Improving credit market conditions have enabled lenders to reintroduce discounts off posted mortgage interest rates. Discounts of up to a percentage point can be negotiated, depending on lender-client relationship.
“Copyright Canadian Real Estate Association. Reprinted with permission.”
As was widely expected, the Bank of Canada held its benchmark overnight lending rate steady at 0.25 per cent at its setting on January 19th, 2010. The trend-setting Bank rate, which is set 0.25 percentage points above the overnight lending rate, remains at 0.5 per cent.
With the economic recovery under way, the Bank acknowledged that the outlook for global growth was “somewhat stronger” than it had predicted in October, but stressed that this was still very much dependent on “exceptional monetary and fiscal stimulus, as well as extraordinary measures taken to support financial systems.” The Bank did, however, remove its comment regarding “significant fragilities” in the global economy, which had featured prominently in the previous two announcements.
Economic growth in Canada turned positive in the third quarter, and is expected to have improved further in the fourth quarter, accompanied by an increase in total CPI inflation, and higher than expected core rate of inflation.
The Bank said it believes that the Canadian economy will have contracted 2.5 per cent 2009, though annual data is not yet finalized. The Bank had originally predicted a 2.4 per cent decline. The Bank also made some small changes to its forecast for this year and next. The Bank now sees economic growth of 2.9 per cent in 2010, down slightly from the 3.0 per cent projection in October.
For 2011, the forecast was upgraded to 3.5 per cent from 3.3 per cent last fall. The Bank said “the private sector should become the sole driver of domestic demand in 2011,” which is when government stimulus is set to expire.
The Bank named a number of factors supporting Canada’s economic recovery – policy support, increased confidence, improving financial conditions, global growth, and higher terms of trade. The Bank reiterated that the strong Canadian dollar and weak U.S. demand were the main drags on the Canadian economy. As a result, growth continues to be driven more by the domestic side and less by exports.
The Bank said that the profile for the recovery in Canada was still consistent with its October Monetary Policy Report, saying inflation would return to the 2 per cent target in the third quarter of 2011. Conditional on this outlook, the overnight rate can be expected to remain at its current level until the end of the second quarter of 2010.
The Bank noted that the risks to the inflation outlook remain unchanged from those outlined in the October Monetary Policy Report. Inflation could climb faster if global and domestic demand ends up being stronger than currently expected. By contrast, inflationary pressures would be held in check by a more protracted global recovery and persistent strength in the Canadian dollar.
While the Bank said it judged these risks to be roughly balanced, it noted that, since it cannot lower rates any further, the overall risk to the projection are tilted slightly to the downside.
“The Bank of Canada’s decision to leave rates on hold, until at least the second half of 2010, confirms the view that it’s still to early to even consider tapping the brakes on economic growth,” said CREA’s Chief Economist Gregory Klump. “While interest rates will eventually rise, the increases are likely to be small. The Bank recognizes that economic growth will rely on domestic demand once temporary government spending measures aimed at propping up economic growth expire. Raising interest rates too soon and by too much runs the risk of choking economic growth.”
As of January 19th, the advertised five-year conventional mortgage rate stood at 5.49 per cent. This is down 1.26 per cent from one year earlier, and stands 0.1 per cent below where it stood when the Bank made its previous interest rate announcement on December 8th.
Improving credit market conditions have enabled lenders to reintroduce discounts off posted mortgage interest rates. Discounts of up to a percentage point can be negotiated, depending on lender-client relationship.
“Copyright Canadian Real Estate Association. Reprinted with permission.”
BC Home Sales Moderate in First Quarter
The British Columbia Real Estate Association (BCREA) reports that Multiple Listing Service® (MLS®) residential sales in the province climbed 43 per cent to 7,110 units in March compared to the same month last year. On a seasonally adjusted basis, MLS® residential unit sales in the province increased 6 per cent compared to February 2010. However, home sales in March were 20 per cent lower than December 2009 on a seasonally adjusted basis.
“Home sales have moderated since the beginning of the year,” said Cameron Muir, BCREA Chief Economist. Waning pent-up demand and eroding affordability were key factors in the market. “Despite an improving provincial economy, higher mortgage interest rates and tighter credit conditions for low-equity homebuyers and investors will squeeze some prospective buyers out of the market this spring,” added Muir.
The BC residential sales dollar volume increased 95 per cent to $9.22 billion in the first quarter of 2010 compared to the same period last year. Residential units sales rose 64 per cent to 18,284 units, while the average MLS® residential price climbed 19 per cent to $504,312 over the same period.
“Copyright British Columbia Real Estate Association. Reprinted with permission.”
“Home sales have moderated since the beginning of the year,” said Cameron Muir, BCREA Chief Economist. Waning pent-up demand and eroding affordability were key factors in the market. “Despite an improving provincial economy, higher mortgage interest rates and tighter credit conditions for low-equity homebuyers and investors will squeeze some prospective buyers out of the market this spring,” added Muir.
The BC residential sales dollar volume increased 95 per cent to $9.22 billion in the first quarter of 2010 compared to the same period last year. Residential units sales rose 64 per cent to 18,284 units, while the average MLS® residential price climbed 19 per cent to $504,312 over the same period.
“Copyright British Columbia Real Estate Association. Reprinted with permission.”
March Housing Starts
OTTAWA, April 12, 2010 — The seasonally adjusted annual rate of housing starts was 197,300 units in March 2010, according to Canada Mortgage and Housing Corporation (CMHC).
Seasonally adjusted annual rate estimates of housing start activity were also revised up for January and February. This resulted in month-over-month gains of 7.5 per cent in January (189,000 units), 6 per cent in February (200,400 units), and a slight decrease of 1.5 per cent in March.
“The moderation in March housing starts was due to a decrease in the volatile multiple starts segment. Helping to offset this was an increase in singles starts as well as more activity in rural areas,” said Bob Dugan, Chief Economist at CMHC’s Market Analysis Centre.
The seasonally adjusted annual rate of urban starts decreased by 4.2 per cent to 175,200 units in March. Urban multiple starts decreased by 15.2 per cent to 77,500 units while single urban starts increased by 6.9 per cent to 97,700 units.
March’s seasonally adjusted annual rate of urban starts increased by 13.5 per cent in Quebec and by 7.3 per cent in the Prairie region, but decreased by 16.3 per cent in British Columbia, by 15.5 per cent in Ontario, and by 8 per cent in Atlantic Canada.
Rural starts were estimated at a seasonally adjusted annual rate of 22,100 units in March
CMHC
Seasonally adjusted annual rate estimates of housing start activity were also revised up for January and February. This resulted in month-over-month gains of 7.5 per cent in January (189,000 units), 6 per cent in February (200,400 units), and a slight decrease of 1.5 per cent in March.
“The moderation in March housing starts was due to a decrease in the volatile multiple starts segment. Helping to offset this was an increase in singles starts as well as more activity in rural areas,” said Bob Dugan, Chief Economist at CMHC’s Market Analysis Centre.
The seasonally adjusted annual rate of urban starts decreased by 4.2 per cent to 175,200 units in March. Urban multiple starts decreased by 15.2 per cent to 77,500 units while single urban starts increased by 6.9 per cent to 97,700 units.
March’s seasonally adjusted annual rate of urban starts increased by 13.5 per cent in Quebec and by 7.3 per cent in the Prairie region, but decreased by 16.3 per cent in British Columbia, by 15.5 per cent in Ontario, and by 8 per cent in Atlantic Canada.
Rural starts were estimated at a seasonally adjusted annual rate of 22,100 units in March
CMHC
Time For a Fixed Term Mortgage?
With the prospect of upcoming rate hikes looming over, many home buyers think that locking into the best fixed rate mortgage is the way to go. Does the idea of a mortgage with a fixed interest rate sound appealing?
There are mixed messages out there about when and if interest rates are going to go up. But just as important is a thorough understanding of fixed-rate mortgages and what it could mean for you and your home investment in the long run. Keep in mind that the cost of interest rates rising by 1% is equivalent to the home price falling by 10%. Historically when interest rates have gone up they have gone up fast. It is not uncommon for there to be a 1% hike in a matter of months.
Here are some common fixed-rate questions you may be asking yourself.
What does a Fixed Rate mean?
The interest rate on a fixed rate mortgage stays the same throughout the life of the loan. Typically, the standard for fixed-rate loans is the 20 to 25 year fixed rate loan. You can also find fixed-rate loans with shorter pay-off periods. When loan periods are shorter, you will have higher monthly payments, but slightly lower interest.
When are Fixed Rate Loans better?
The advantage of the fixed rate mortgage is that the payment is the same each month. This is important especially when interest rates are unpredictable. When interest rates rise, people with adjustable rate mortgages are faced with increasing monthly mortgage payments.
A fixed-rate loan means you will always know how much your home payment will be each month, regardless of what is happening with the economy or current interest rates.
What’s the downside of Fixed Rate Loans?
The disadvantage is that the interest is generally a little higher than an adjustable rate. With a fixed-rate loan, you’ll always pay the same amount of interest. That is great when interest rates are climbing, but if they drop below your interest rate, you will continue paying the higher amount of interest. Of course, you can always refinance a fixed-rate loan in order to get down to the best fixed rate mortgage but this may not always be an option.
Over the life of your fixed-rate loan, you will pay a substantial amount of interest. In fact, you will probably pay hundreds of thousands of dollars in interest. There are ways to manage your mortgage so that it is an investment that works for you, and you can do this by talking to a mortgage specialist.
Should you have a Fixed Rate Mortgage?
You should discuss your particular situation with a talented mortgage specialist. Generally, you'll find that fixed rate mortgages are the right choice if:
• You think interest rates are low
• You can afford the payment for the house you want
• You need to budget for and predict monthly payments
• You will keep your home for a relatively long period of time
The best fixed rate mortgage works for you and your lifestyle. If you'd like the peace of mind that comes with a stable interest-rate payment, then a fixed-rate mortgage may be the ideal choice. Borrowers often choose fixed-rate mortgages when interest rates are low and are expected to rise.
There are mixed messages out there about when and if interest rates are going to go up. But just as important is a thorough understanding of fixed-rate mortgages and what it could mean for you and your home investment in the long run. Keep in mind that the cost of interest rates rising by 1% is equivalent to the home price falling by 10%. Historically when interest rates have gone up they have gone up fast. It is not uncommon for there to be a 1% hike in a matter of months.
Here are some common fixed-rate questions you may be asking yourself.
What does a Fixed Rate mean?
The interest rate on a fixed rate mortgage stays the same throughout the life of the loan. Typically, the standard for fixed-rate loans is the 20 to 25 year fixed rate loan. You can also find fixed-rate loans with shorter pay-off periods. When loan periods are shorter, you will have higher monthly payments, but slightly lower interest.
When are Fixed Rate Loans better?
The advantage of the fixed rate mortgage is that the payment is the same each month. This is important especially when interest rates are unpredictable. When interest rates rise, people with adjustable rate mortgages are faced with increasing monthly mortgage payments.
A fixed-rate loan means you will always know how much your home payment will be each month, regardless of what is happening with the economy or current interest rates.
What’s the downside of Fixed Rate Loans?
The disadvantage is that the interest is generally a little higher than an adjustable rate. With a fixed-rate loan, you’ll always pay the same amount of interest. That is great when interest rates are climbing, but if they drop below your interest rate, you will continue paying the higher amount of interest. Of course, you can always refinance a fixed-rate loan in order to get down to the best fixed rate mortgage but this may not always be an option.
Over the life of your fixed-rate loan, you will pay a substantial amount of interest. In fact, you will probably pay hundreds of thousands of dollars in interest. There are ways to manage your mortgage so that it is an investment that works for you, and you can do this by talking to a mortgage specialist.
Should you have a Fixed Rate Mortgage?
You should discuss your particular situation with a talented mortgage specialist. Generally, you'll find that fixed rate mortgages are the right choice if:
• You think interest rates are low
• You can afford the payment for the house you want
• You need to budget for and predict monthly payments
• You will keep your home for a relatively long period of time
The best fixed rate mortgage works for you and your lifestyle. If you'd like the peace of mind that comes with a stable interest-rate payment, then a fixed-rate mortgage may be the ideal choice. Borrowers often choose fixed-rate mortgages when interest rates are low and are expected to rise.
Self employed mortgages
CMHC currently offers default mortgage insurance for self-employed borrowers through a stated-income mortgage product up to 95% loan to value (LTV) – meaning the down payment can be as low as 5% of the purchase price. But as of April 9th, 2010, the maximum LTV for self-employed individuals will decrease to 90% for purchases – meaning the down payment will now be 10% instead of 5%. And if a self-employed individual wishes to refinance an existing mortgage after April 9th, the maximum loan amount is reduced to 85% from the current 90% of the home’s value.
Preparing Your Home For Sale
When you’re setting out to get your home ready to sell, you need to look at your house in a whole new way. You have to think of your house as a product that is about to go on the market where it is probably competing with brand new housing. This means it needs to show well and appeal to potential buyers as a place they can easily move right into without making major repairs.
Although some homebuyers are willing to take on fix-me-uppers, many of today’s house hunters lead busy lives and may not be interested in embarking upon major repairs or improvements upon moving in.
Fix it First
If you need to make improvements to your home, do the work before the “For Sale” sign hits your lawn. Potential buyers are not interested in hearing about your good intentions to look after defects before a transfer of ownership takes place. Even if fix-up work is underway, buyers may not be able to visualize what your home will look like upon completion of a project. They will just remember it being in a state of disrepair.
Professional Inspection
A serious buyer may want to have a professional home inspector check your house from top to bottom before making an offer. Keep in mind that the option of hiring a professional home inspector is open to you as well. If you can afford it, a pre-sale inspection is a good idea. This is the best way of finding and taking care of serious deficiencies before an inspector hired by a potential buyer uncovers them.
Inspection Checklist
Click here to see Canada Mortgage and Housing Corporation’s (CMHC’s) practical checklist to help you get started in preparing your home for a sale. Here you will find useful information for checking both your home’s exterior and interior, as well as helpful tips when it comes time to start showing your home.
Although some homebuyers are willing to take on fix-me-uppers, many of today’s house hunters lead busy lives and may not be interested in embarking upon major repairs or improvements upon moving in.
Fix it First
If you need to make improvements to your home, do the work before the “For Sale” sign hits your lawn. Potential buyers are not interested in hearing about your good intentions to look after defects before a transfer of ownership takes place. Even if fix-up work is underway, buyers may not be able to visualize what your home will look like upon completion of a project. They will just remember it being in a state of disrepair.
Professional Inspection
A serious buyer may want to have a professional home inspector check your house from top to bottom before making an offer. Keep in mind that the option of hiring a professional home inspector is open to you as well. If you can afford it, a pre-sale inspection is a good idea. This is the best way of finding and taking care of serious deficiencies before an inspector hired by a potential buyer uncovers them.
Inspection Checklist
Click here to see Canada Mortgage and Housing Corporation’s (CMHC’s) practical checklist to help you get started in preparing your home for a sale. Here you will find useful information for checking both your home’s exterior and interior, as well as helpful tips when it comes time to start showing your home.
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