While Canadian Mortgage Rates are at an all-time low, some Buyers are wondering if they should hold out for an even lower rate? Is it even possible?
Well, as some (many) analysts are saying, YES! mind you, the rates can't go much lower- however, they can go lower & are even expected to!
Why would they continue lowering? Well, with competitive lenders, the Pandemic's impact on the local economy & other factors, lenders such as big banks are pressured to lower their interest rates to attract Buyers.
Canada’s Central Bank slashed the benchmark interest rate by 0.5 per cent on three separate occasions in March to bring them down to 0.25 per cent. Government of Canada five-year bond yields fell to 0.41 per cent in August from 1.64 per cent last December. This impacts how lending is offered by Banks and Brokers because they are able to borrow money themselves at a lower rate. Currently, many Banks and Brokers are offering a 5-year at less than 2% (nobody would have thought it possible 5 years ago!)
So, what does this mean for Buyers? While urban and suburban areas are booming for Sellers (multiple offer situations rising the prices of homes) and Buyer's are forced to pay much more than they would have even two years ago for the same properties, there is at least an offset in the amount of interest that they will pay on their Mortgage. This has enticed Buyers despite what is evidently a Seller's Market.
This is a very strange twist of perfect storm for both Buyer's and Seller's right now. Yes, its currently considered a Seller's Market; Homeowner's who are selling seem to have an advantage on the Buyers because there is a lack of 'inventory' in the market; this means that there are more people looking to buy than are looking to sell. So, this puts the Seller at an advantage in the sense that they have multiple people interested in their home due to a lack of options. Therefore, many houses go into bidding wars and Sellers get far over their ask prices. My last two listings did just that! I had a listing in Thorold, that we listed at 449,900 and we sold it for a wopping 535,000 ! Meanwhile in Hamilton, I have a home that was listed on a busy street, two bedrooms and unfinished basement, we listed this home at what they were comfortable walking away with, 499,900 and within 4 days we had multiple offers and ended up closing the sale at 562,000! It's amazing the market that Sellers have at the palm of their hands right now. Those that have more than one home or rental properties, investment properties etc. are at a huge advantage because when they sell they aren't also in turn forced to then purchase in this market!
However, its an amazingly easy and beneficial time for Buyer's to be jumping in and taking advantage of the market because of the incredibly, all-time low Mortgage rates, which is likely the reason for the influx of Buyers in the market which has created the Seller's market in the first place (catch 20/20). So, in short- it is a market perfect for everyone right now. In the traditional sense of the terms, it is a Seller's market; in the non-traditional sense (to say if its beneficial in the market currently or not) it is also a Buyer's market. Its a perfect time to sell your home because you'll get more for it than you ever would previously, but its a great time to buy because you'll have the ultimate low interest rates !
To sum things up, wether youre looking to buy OR sell- the time is now! If you need help or have any questions feel free to shoot me an email at sfarrauto@rmxemail.com ; I will always answer within 12-24 hours :)
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