Instead of talking about the ups and downs of the market today, I would like to take a minute to clarify the recent changes in the mortgage interest rates and let you know where I see the opportunities and risks.
Unless you have been hiding under a rock, you have definitely heard that interest rates are on the move up. It is absolutely true - sort of! Rates for fixed term (3, 4, 5 year, etc) mortgages have move up quite a bit. A few months ago, we were seeing rates as low as 2.89%. Now, the best posted rate is around 3.59% which can often be reduced with a bit of negotiation to 3.39%. Keep in mind that these rates are only for mortgages where the interest rate is guaranteed for the length of the team. For example, a five year term. Fixed rate mortgages are very popular because they protect a borrower against rate increases during the term of the mortgage.
But, there is another type of mortgage called a variable rate mortgage. Variable rate mortgages can still be had with an interest rate under 3%. The risk with a variable rate mortgage is that if the Bank of Canada increases the interest rate that they charge to banks, your mortgage interest rate will automatically go up without warning. In short, the bank takes the risk on the interest rate with a fixed rate mortgage, and you take the risk with a variable rate mortgage. It's pretty easy to figure out that if your bank is taking the risk, you are going to pay for that privilege.
For many, it makes a lot of sense to go with a variable rate mortgage. If you do choose this route, work with your lender to ensure that you can handle any interest rate increases and also make sure that they keep you up to date with what the Bank of Canada is planning. Most variable rate mortgages allow you to switch to a fixed rate mortgage at any time and if the Bank of Canada rate moves up, you may want to do this.
Here are the raw stats from the last 30 days:
Over the last 30 days, 281 single family houses were sold, down by 13 houses from last week. The median price is up $250 to $540,000. The average house was on the market for 50 days. In the last 30 days, 104 condos were sold, down by 1 condos from last week. The median price is up $30,000 to $290,000. The average condo was on the market for 63 days.
There are now 2,097 houses for sale, down by 31 from last week. Condo inventory has fallen by 4 to 934 suites.
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