According to a recent report,
BCREA (British Columbia Real Estate Association) forecasts that the 1-year
fixed mortgage rate could increase to 3.2% by end of 2010 and rise further to
4.05% by the end of next year. The reasons for the rate hikes include the
fiscal tightening by the Bank of Canada and the better economic outlook, says
BCREA.
Regional Vice-president (for western Canada) of mortgage
company MCAP, Joe Santos however says that that BCREA’s forecast is a little
far-fetched. Mr. Santos says that a jump from the current 1-year fixed rate of
2.9% to 4.05% by the end of 2011, which is an increment of 115 basis points, is
improbable. He says that this substantial increase is unlikely as the US economy continues to remain weak while the
economic climate in Europe is still bleak and uncertain.
He also cites unemployment as an issue that does not support the increase in
rates. Mr. Santos agrees that the interest rates would increase in the coming
year but not by a large margin.
The present rock-bottom interest rate is a good opportunity
to buy a new home or take out a second mortgage
on your home. BCREA says that the housing market conditions in the western
province are looking good for buyers as far as supply is concerned. Chief
Economist of BCREA, Cameron Muir, says that a large number of homes have been
put up for sale, making this an opportune time for home buyers.
Mr. Santos agrees, adding that home buyers, especially those
who plan to stay in their homes for a long time, should consider purchasing
houses this year and in early 2011.
