07 Dec It’s perfect time to buy real estate in Calgary with low Interest Rates
If you have been putting off the decision to buy property in Calgary, there is a good reason why you need to do it now. Economists suggest that in the current low mortgage rates coupled with the fact that rates are expected to rise in the near future, this is without doubt the time for homebuyers to apply for mortgages.
A decrease in interest rates means that there are more individuals who are able to buy homes. Low interest rates also mean that homebuyers can afford to buy more homes for the same monthly installment that they would have paid for a higher costing unit. This is therefore the best time to visit your mortgage financier and ensure that you get preapproved before the rates go up. If you are concerned about your low budget, you do not have to worry as it is possible to find a mortgage option that is meant to suit your need and budget.
The outlook of interest rates
Economists suggest that homebuyers are currently enjoying low interest rates. However, the trend will not continue and we should begin to see an increase in interest rates. The rise in interest rates will only cause a worsening of the Calgary real estate market. Diana Petramala an economist with TD bank says that already home prices have fallen by 4% and she predicts that we are still going to see a further slide in the prices in 2016 and 2017. Diana suggests that home prices are likely to increase by around 10% and mortgage interest rates should start rising in December 2015.
What is the impact of the interest rates?
The interest rate increase will cause lower housing demand. This is despite the fact that the decision by homebuyers on whether to acquire property will be affected by other factors such as low levels of migration and low employment growth. Diana adds that Calgary is currently experiencing a correction and this correction will be deepened further by an increase in interest rates.
The views by the economist are backed by a report by CMHC in their fall housing outlook. They suggest that interest rates are likely to start rising in early 2016 and this will lead to the housing market slowdown. The rate of interest for mortgages will between 2.6 and 3.3 percent. The 5 year rate is expected to be in the range of 4.10 and 5.2 percent. While the reports adds that the Bank of Canada will institute measures to prevent a large increase in interest rates, the increase will nevertheless cause a fall in sales by between 10 and 15%.
Economists say that there has been a rebalancing of the demand & supply equation in the recent past. Therefore, for homebuyers who were eyeing a property that got scooped by another buyer, this is the best time they can try to buy again as there has been an increase in the resale inventory. Therefore, you need to buy now before interest rates can rise.