With the Bank of Canada sticking to low interest rates, many are worried when the US’ rates rise Canada will be affected – but will it? Are slightly higher interest rates a bad thing or just something that has to happen? Here we’re going to talk about why interest rates rising won’t be bad for mortgages, but if you want to lock in the lowest interest rate now might just be the time. Interest rates can’t stay this low forever, so you may as well take advantage of them now! Let’s get started.
Biggest Impact Seen with Refinancing
Not many people are refinancing this year as they were last year – and that’s a big deal. Last year people were refinancing their homes left and right, while this year we’re seeing fewer and fewer people looking to completely refinance the mortgages they already have.
This doesn’t mean that they’re not looking for mortgage help with buying a home, second mortgages or home equity lines of credit however.
Just How Affordable Are Mortgages Right Now?
Let’s say you make $50,000 – this could be you on your own or you and a partner together. If the average home price is sitting around $550k in the Greater Toronto area and you take out a 3.5% interest mortgage, you’ll still end up saving 39% over the course of a year AND build up equity. Calgary and Toronto just happen to be some of the most expensive areas to buy in at the moment, but the average price drops throughout the rest of Canada.
But what does this mean? Aren’t lower interest rates what you want?
We’re Toronto mortgage brokers and we know that each and every point of interest matters – but in the grand scheme of things an extra point or two isn’t going to cause a housing crisis. With 70% of Canadians being approved their first time applying for a mortgage and the average credit score being 700 when they apply, even if interest rates rise you probably won’t feel the pinch.
Why do Interest Rates Have to Rise?
Interest rates have to go up eventually if Canada wants to remain competitive with the US, the UK and other countries abroad. Just because interest rates take a hike doesn’t mean that mortgage rates will – if you’re looking to refinance right now for example we’ll be able to help you find many lenders that are willing to give you a great deal. Like many other things, supply and demand come into play.
If you’re trying to find a mortgage and you’re worried about interest rates going up, give us a call. While you might need to fuss over finding the right home, the last thing you should have to worry about is your financing. We’ll help you get preapproved for a mortgage that suits your needs, as well as compare different offers from lenders that want to work with you. Why get the one that’s wrong when you can get the one that’s right? Give us a call today!