The Bank of Canada Governor Mark Carney is warning homebuyers against taking too much debt because the low interest rates will not be around forever.
After releasing his quarterly economic review, Carney noted that people should be managing their finances in preparation for rates to return to a more normal level.
Rates, as we all know are exceptionally low, and homebuyers are taking full advantage of it, which is not a bad thing as it currently helps stimulate the economy. However, for people who are “biting off more than they can chew” will face tough times when rates start to normalize.
We have been seeing the housing market rise continuously the past few months, reaching the levels of 2008, and surpassing them in certain housing markets, even though there was an extremely slow start at the beginning of the year.
This shows how well the low interest rates are working to help push homebuyers to take advantage of it.
Despite there being a low stock of inventory, the market still prevails with bidding wars pushing prices higher.
What people have to start to notice is that banks are beginning to increase their residential mortgages slowly; this month you will find that the “Big Six”, Canada’s six largest banks have all raised their residential mortgage rates.
Just last month we saw a decline in residential mortgage rates, however this quickly changed.
This only proves that the low rates will not be around much longer, and you should either grab onto a a low rate while you can, or be forced to deal with a higher rate when you decide to purchase a house.
Keep in mind that you should anticipate when rates begin to stabilize and return to normal levels, because at that time you do not want to be left in a position where you are unable to afford payments.
Heleen Jacobsen
Broker of Record with InfoMarket Group GMAC Real Estate
www.infomarketgroup.com
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