It’s a Buyer’s Market – Take Advantage
In these uncertain economic times, your first instinct is probably to adopt a conservative attitude and cut down on your spending. But for those looking to purchase their first home, now may be the best time to buy. Home prices and mortgage rates have fallen nationwide, marking the beginning of a cooling period in the Canadian housing market.
Let’s take a look at the current state of the market. Canadian Real Estate Association recently reported that as of July, housing prices were down 2 per cent from last year. Vancouver has been hit particularly hard by the cooling, with average sales prices dropping around 12 per cent. Construction starts are also down 6.1 per cent nationwide and are projected to continue falling in 2013. What’s more is that Scotia Bank predicts that housing prices will fall up to 10 per cent over the next two to three years and stay that way for nearly a decade, making it truly a buyer’s market once again. It’s a good time for first-time buyers to scoop up deals offered by old homeowners looking to move on to new properties.
If the falling price points aren’t enough to convince you that now is the right time to become a homeowner, perhaps this will: mortgage rates are at record lows. Even with the five years bond yield shooting up over the past few weeks, mortgage rates are expected to stay low in the immediate future. The mortgage rate war over five-year fixed mortgages continues to be waged between lenders, with the lowest rates hovering between 2.88 and 2.99 per cent. Five-year fixed mortgages are attractive for new homeowners because they offer low rates and are full services mortgages that come with the option of increasing your regular payments and applying significant lump sum payments to your balance annually.
Even though new mortgage rules came into effect this summer, they are not a major deterrent for new homeowners, all things considered. Sure, the amortization period has been lowered from 30 years to 25, meaning that new homeowners will have to make larger payment amounts over a shorter period of time, but it also means that in the long run, homeowners will be paying a lot less interest.
With these new rules (and others), it is more important than ever to enlist the help of a mortgage expert before purchasing a new home. Mortgage brokers can help you understand the implications of the new rules and secure the appropriate financing. In your search, bet on small lenders: they can often offer lower rates and better terms than big banks. Set your eyes on a home you can reasonably afford and then get shopping—there are plenty of beautiful homes out there waiting for you.