Here is an interesting overview of the Canadian Mortgage Market
written by TD Securites’ Eric Lascelles.
68% of Canadian households own their homes
1% of Canadian mortgage holders have negative equity in their home
Home equity withdrawal remains relatively contained
Canadian mortgages in arrears by 3 or more months at 0.44% in March 2010
These look like good, healthy stats for Canadian Mortgage Holders
What will happen with mortgages & rates in the short term?
And what should you be doing?
Watch for a slow, low & steady rise over the next 12 months while the Economy get’s it’s self sorted out. Pressure from Europe’s Sovereign Debt will drag up rates across the board.
Canada will benefit from a more balanced market, modest growth and stable employment.
As things improve there will be great opportunities in business, investment & real estate. So be ready to act. And be cautious with consumers debts, now is the time to consolidate.
Being flexible at the lowest rate is the key.
Exisiting Mortgage Holders
If you’re in a fixed rate mortgage consider a strategy that, without increasing your payments, pays more towards your principle every month. This will shave years of your mortgage & save you money in interest.
A good plan will save you money without paying more.
You can use your equity to invest in your business or take advantage of the right opportunity when it comes along.
New owners &1st time buyers need time to grow equity and reduce their mortgage balance.
Focus on a mortgage that gives you the lowest rate while allowing you to direct more cash towards reducing your principle.
You’ll thank yourself at renewal time when rates are higher.
The key is being flexible at the lowest rate.
So watch for slow, low & steady increases in rates.
Be cautious with your consumer debt.
And make a plan to pay more against your principle without increasing your monthly mortgage payments.
I wanted to thank Monica & Catherine for giving me grammar lessons after my last post.
I’m sure they will be demanding a wage from me soon. 🙂
Here’s a question I get everyday… “What do you think will happen to house prices?”
Recent talk of a potential Canadian housing bubble has got buyers wondering and waiting. They’re afraid to buy now and make a mistake. Will prices go up? Will they go down? And… is there in fact a real estate bubble?
In my opinion there is no housing bubble here in YVR.
Strong local employment and a robust local economy are supporting house prices. Our Canadian economy looks to be in good shape, as long as people have jobs, property prices will remain where they are and increase. Waiting to buy is not a good strategy, prices will increase. (Of course I am biased because I work in the industry)
What about Interest Rates?
The news is filled with stories about rising interest rates and that’s causing buyer anxiety.
Many buyers don’t realize that if they get into a good 5 year fixed rate mortgage now they’re protected for 5 yrs. Prudent consumers should be planning ahead for renewal at higher rates. They should think about their future monthly payments should rates rise and look at their projected income in 5 years to see how those compare. If the new payments at renewal are too high compared with their monthly income maybe spending less now is a good plan, or perhaps lowering debt over 5 years will help.
I believe rates will rise slowly over the next 2 years then level off around the 6 to 6.5% range for a 5 year fixed rate mortgage. (I’m talking about broker discounted rate here).