Today I saw headlines regarding the Bank of Canada's rise of the national prime lending rate by .25%. All of these headlines were variations of the same theme like a coast to coast tsunami was heading our way. "Get set for...brace yourself for...my favorite was the Globe and Mail's headline this morning right out of The Book of Cataclysm... "The end is Nigh for low interest rate heaven."
The more Nostridamus like the bold face headline, the more chance you will grab that paper on your way to work right?, or so the theory goes. In real estate on the other hand the more we can soften such news the more enthused we can keep our buyers.
I'm going with neither approach, instead I'll shoot right up the middle. What does a quarter percent rise in the bank rate mean to you and me when we apply for or renew our mortgage?
About $12 more each month per $100,000 of mortgage we hold. A penny at the pump increase in gas prices has more impact on our pocket than that and yet we barely flinch when we drive by and see it has gone up 5 cents over night because we are accustomed to it.
Meanwhile commodity prices have been steadily falling and will continue to fall due to the good global financial position Canada maintains against the countries we trade with. For the moment variable rate mortgage are still to be had for just over 2% but the likelihood of further increases to prime are strong and some say we may see it climb from the 2.5% it is at this morning to as much as 5% by year end. Again these are prime rates, the rates our financial institutions borrow at to lend to you and I. Depending on the mortgage product you choose and your credit status, most should be prepared for rates a little higher. It is a good time to do some investigation with your lender on the topic of locking in your rate.
In the Barrie area market the number of active listings is on the rise shifting the balance of negotiating power from the sellers who were calling the shots during the spring rush back towards the buyers. Prices will continue to inch up in Simcoe County and in most Canadian markets. Getting in ahead of further interest rate increases is wise and is still going to see you with a mortgage rate that is close to the bottom of the curve on at least the past 25 years.
As Donnie Brasco might say if he were a Realtor, "Forget about it, buy a house".