RE/Max has released a report saying that the Metro Vancouver real estate market is being driven by first time buyers looking to avoid higher interest rates down the road. Did we get US style mortgages where you can lock in low rates for the entire mortgage term? Maybe I haven’t been paying enough attention.
Re/Max said the prospect of higher mortgage rates has prompted many of those determined to get into the market to act in the early part of this year.
It also noted the federal government’s newly implemented conditions for mortgages that reduced the maximum amortization period for government-insured mortgages to 30 from 35 years, and limited the amount people can borrow when refinancing their mortgages to 85 from 90 per cent of the value of their homes.
Led by the Bank of Canada’s relatively low benchmark rate of one per cent, homebuyers continue to enjoy mortgage rates that are low by historical standards. However, it’s not expected to last.
Just this week, most of Canada’s major banks hiked their mortgage rates, with standard five-year, fixed rates moving up 35 basis points to 5.69 percent a year.
Locking in for 5 years on 25-30 year debt because you expect interest rates to rise sounds like an interesting strategy.. Be sure to get as much as you can afford, because by the time you have to renew at a higher rate your income is sure to have risen tremendously right?
