The beginning of 2018 is already off to a solid start for active transactions, and we are seeing buying activity pick up, especially in the condo market. There is a better selection of properties currently than we have seen in recent years, and savvy buyers are making acquisitions. The market has seen a slight slow down but there are still many great deals being made.
One of the factors drawing buyers back into the market is the spectre of increasing mortgage rates as the Bank of Canada raises the overnight lending rate. To date, we have seen an interest rate increase of 25 basis points, and the forecast calls for another one to two rate increases later in the year. While it may seem counter-intuitive, rate increases historically draw more buyers back into the market as they look to make acquisitions before borrowing costs rise further, so, this is the perfect time to get into the market.
Interest rates remain at near historic lows, and while the posted rates are increasing, lenders will offer competitive rates that are below the posted rates. Shirriff Wells has excellent lending contacts that can walk you through the rates and product features of different mortgage products. When seeking a mortgage in this climate, some questions we recommend asking include:
- Should you be going with a fixed vs variable rate (65% of Canadians currently opt for fixed rates vs. 35% in variable products)?
- How long is the term of your rate?
- Is it portable?
- Are there any penalties or pay-down provisions for your mortgage product?
- Are there collateral provisions attached to it such as being able to draw on a Home Equity Line of Credit (HELOC)?
Working with a lending professional is an excellent way to ensure you have the information you need to acquire the product most suitable for your needs. Don’t just assume the lowest rate is the best option – often having a flexible product carries benefits that may outpace a rate that is only marginally less but very restrictive. As the future is unknown, it is good to keep as many options open as possible.
Whether you are looking to purchase a home, or simply want to review your current financing, please contact us. We will be happy to review your needs or connect you with lending professionals who will cater to your needs. We look forward to hearing from you!