Banks threatens mortgage rate will go up (so that people will buy a home quickly) as a trick to fulfill their mortgage quota (shortfall) ?
I won’t be surprised. Banks did just that a few years ago … Probably more than once and the interest never ever go up, only down (until today).
First-time home buyers warned of possible mortgage hikes
BMO predicts mortgage rate hikes in second half of 2014
75 per cent of British Columbians are likely to stress-test their mortgages, a study finds.
According to BMO’s First-Time Home Buyer’s Report, one-third of first-time buyers (31 per cent) expect interest rates to stay the same over the next five years. However, these first-time buyers may need to reconsider their outlook.
BMO Economics projects the Bank of Canada will raise its overnight lending rate in the second half of 2014.
“The Bank of Canada has made no changes to its policy bias,” said Doug Porter, Chief Economist, BMO Capital Markets. “With Canadians’ debt-to-income ratio poised to stabilize in the months ahead and the housing sector cooling, we continue to look for a rate hike during the second half of 2014. Even so, other interest rates, such as longer-term mortgage rates, can rise well ahead of the Bank of Canada.”
Frances Hinojosa, Mortgage Expert, BMO Bank of Montreal, noted that the current projections indicate the cost of borrowing to own a home will gradually increase, and buyers should take note when planning their purchase. “It remains vital for Canadians – particularly homeowners – to be prepared for the inevitable rise in interest rates.”
Those living in Ontario are the most likely (34 per cent) to expect interest rates to stay steady over the next five years, whereas those in the Prairies are the least likely (27 per cent). Twenty-eight per cent of British Columbians expect rates to stay steady.
The report also showed that, while the timing of the rise in rates may be different, Canadians are taking the right steps — 76 per cent plan to “stress-test” their mortgage against a higher interest rate to ensure they can afford their home over the long term. Ontarians are the most likely (80 per cent) to stress-test their mortgage, while Atlantic Canadians are the least likely (62 per cent). British Columbians are also likely to stress-test, at 75 per cent.
“For both first-time and repeat buyers, it’s essential to stress-test their mortgage against a higher interest rate to ensure they can manage a rise in costs as a result of any potential increases in interest rates down the road,” added Ms. Hinojosa. “It’s also wise to choose a mortgage with a shorter amortization, which can help homeowners become mortgage-free sooner.” Other key findings include:
— One-in-three (32 per cent) first-time buyers are unsure how long they will live in their first house
— Two-in-three (68 per cent) consider their first home to be only a “starter home”
— Six-in-ten (63 per cent) have made cutbacks to their lifestyle to save for their first home
— One-in-four (27 per cent) expect their parents or other family members to help them pay for their first home
Ms. Hinojosa added that those who are ready to enter the marketplace can get a head start on planning by getting pre-approved for a mortgage before setting out to lock down the perfect home.
For those looking to buy a home, try BMO’s Mortgage Calculator to complete an affordability assessment and determine how much you can realistically afford: http://www.bmo.com/calculators/hmcia/index.jsp?lang=en.
The BMO First-Time Home Buyers Report was conducted by Pollara. Survey results cited in this report are from online interviews with a random sample of 2,000 Canadians 18 years of age and over, conducted between February 25 and March 5, 2013. As a guideline, a probability sample of this size would yield results accurate to +/- 2.2 per cent, 19 times out of 20. Data has been weighted by region, gender, and age, based on the most recent Census figures, so that it is representative of all adult Canadians.
GTA REALTORS® RELEASE JUNE RESALE HOUSING FIGURES
Meanwhile, some figures from Greater Toronto Area REALTORS® …
“The sales picture in the GTA improved markedly in the second quarter of 2013. While the number of transactions was still down compared to 2012, rates of decline were substantially improved compared to the first quarter,” said Toronto Real Estate Board President Dianne Usher.
“As a growing number of homebuyers, many of whom put their purchase on hold due to stricter lending guidelines, now reactivate their search, the expectation is for renewed growth in home sales in the second half of 2013,” added Ms. Usher.
The average selling price in June was up by 4.7 per cent year-over-year to $531,374. In line with the 2013 norm, June price growth was driven by the single-detached and semi-detached market segments, particularly in the City of Toronto. Over the same time period, average condominium apartment selling prices remained in line with 2012 levels.
“The short supply of low-rise home types in many parts of the GTA relative to the number of households looking to buy continued to prompt strong upward pressure on selling prices of singles and semis,” said Jason Mercer, TREB’s Senior Manager of Market Analysis. “We have also seen enough buyers in the better-supplied condo apartment market to provide support for selling prices at current levels.”