Posted 8.3.12 @ 10:45
There has been a lot of talk about how interest rates are about to climb, but the Bank of Canada released a statement recently that they should stay low well into 2014. This means that if you want to buy Oakville real estate or sell your luxury homes for sale, you’ll be able to have as much time as you need. But are interest rates really that important, and why aren’t they going up? Here we’ll go over what this really means for you, so let’s get started!
What Are Interest Rates?
Interest rates are the real profit a lender nets for giving you a loan. If you borrow $200,000 at 5% interest, you’ll have to pay back about $10,000 in interest each year (unless you pay more to the principal, then this amount goes down). If interest rates are low, it’s a lot easier to repay your loan and get the money that you need to buy a house. If you’re selling your real estate, you’ll be able to find more buyers because they’re able to get financing easier. Lower interest rates work out better for pretty much everyone.
Is it a Good Time to Buy and Sell?
Figuring out whether it’s a good time or not to buy or sell a house is never easy, but it doesn’t get much better than it is right now. Prices are climbing, interest rates are low and with the new Mortgage Rules released last month it’s a lot easier to get financing (unless you want to buy a $1m+ house anyway!). If financing is easier for buyers to get, you benefit as a seller. Since many sellers are Baby Boomers looking to top off their retirement funds, buyers benefit too. So from now until 2014 Canada will have a great real estate market fuelled by low interest rates and a stable economic climate.
Why Are Interest Rates Staying Low?
Interest rates are staying low because the global economy is cooling. This isn’t necessarily a bad thing for Canada though, since our economy is really strong right now! You’ll be able to get the financing that you need to buy a home. If you have to pay less towards interest, you’re going to be able to get into a great home and pay less in the long run. Since more people have already bought a home, you’ll be able to snag a great home without nearly as much competition as you would before.
Consumers are also spending less and borrowing less, due to austerity measures. This isn’t just in Canada, this is everywhere. Governments are also spending less, so interest rates are going to remain low until the global economy recovers.
With a generally stagnant economic climate, that means that the Bank of Canada will not be able to raise interest rates for some time to come. So until early 2014 (at the least) interest rates are going to remain low and it’ll remain an excellent climate to buy and sell a house.