. The Bank of Canada (BoC) has stated that they will try to hold Prime at the low emergency rate of 2.25%. This is a key part of the financial stimulus and has been keeping the economy alive. Removing this stimulus too soon could undo the positive effects that the spending has achieved so far. This is why the BoC has stated that they will leave it as is, even if other rates begin to rise. The other reason is that Canadian banks needed to know what the cost of funds was going to be so they could in turn loan funds to further stimulate the economy. Consumers who wait for Prime to rise before locking in their variable rates will be disappointed as rates will have already go up as noted above.
Buy or refinance before mid 2010.
Today’s rates are emergency interest rates as we have just gone through the worst financial crisis since the Great Depression. These are once-in-a-life-time rates that we should not see again in our life time. Buying before 2010 will allow you to take advantage of newly adjusted lower home prices and the low interest rates as well.
Renewing an existing mortgage that is in year 3, 4, or 5 of a 5 year term and paying the 3 month interest penalty now will produce savings because you can fix your new mortgage rate at the lowest they have been for 70 years. You will also not renew later into the rates that will be around 6%.
Another Reason to Buy Soon.
Homeownership costs in Alberta have dropped to levels that were last seen 3 years ago, further boosting the resale market. This is "the biggest cumulative drop in the history of the RBC Affordability Index, reaching levels that were last seen in late 2005" said Robert Hogue, senior economist, RBC. "In response, buyers have jumped back into the housing market in a big way since the spring, sending existing home sales soaring over 60 per cent between April and July."
Call us now
to take advantage of these once-in-a-life-time mortgage rates before they disappear.
