When is the best time to get a mortgage loan? As you read this, every other Canadian who’s always dreamt of that dream house in Toronto, Ontario, or any other place in the country is contemplating the exact same question.
If you’ve been looking at house prices lately, then you probably noticed how the term “housing bubble” is almost always seen in the news. There is some truth to the “housing bubble”, although it is only a possibility as of now. The Canadian Real Estate Association (CREA), as cited in an article in the Financial Post, reported that the national average price of homes sold last May was 8.5% higher-amounting to as much as $346,881. This is the highest average rate of prices recorded in a long time.
This is even more daunting, if you consider the fact that in the past 20 years, average prices of homes have only increased by about 2.4% to 4.7% annually. An increase of almost two times as much as the average annual rate for the previous 20 years is truly worth nothing. The hike in home prices is especially evident in the Greater Toronto Area and the Greater Vancouver Area.
Factors affecting Residential Home Prices
The article goes on to argue that the full price of homes in select areas in Canada does not necessarily mean that there’s a house bubble crisis going on. There are several factors cited for the sharpening increase in the house rates, in contrast to the relatively low rates of houses in the previous year.
One is the steps taken by the government, the Bank of Canada, and other institutions to regulate the residential real estate market. Also, the inflation or expectation of increase in interest rates has prompted many Canadians to buy residential properties in the first few months of 2010. However, the increase in prices and the buyers is expected to decrease in the next half of the year.
What this Means to Mortgage Rates
The effect on mortgage rates is marked. For one, fixed-rate mortgages are higher than they used to be. Variable-mortgage rates are likewise affected, although a bit less than fixed-rate mortgages are.
