Affording An Edmonton Mortgage In A Rising Rate Environment
Canadian interest rates have risen steadily over the second half of 2013. This will impact buyers and sellers directly when making changes to the place you call home. Here’s how.
Understanding Mortgage Rates
First let’s make clear that not all mortgage interest rates have been affected. All floating rate mortgage products (variable, line of credit, etc.) have remained untouched as these are directly affected by the Bank of Canada’s prime lending rate which has not moved in the last three years. The area we are addressing are fixed interest mortgage rates which are affected by movements in the Canadian Bond Market.
How This Affects Buyers
The most important point to be aware of as an Edmonton buyer is to plan ahead. If you are even batting around the idea that you are going to be purchasing a home in the next 3-6 months, you should be reaching out and contacting your Realtor and mortgage professional to ensure your financial house is in order. What you will want to ensure is that you will qualify based on the new Canadian mortgage rules, that you have optimized your credit rating, and that you know well in advance what purchase price you can afford.
How This Affects Sellers
For someone looking to sell their home – you will want to know that it is becoming harder for those interested in your property to qualify for their mortgage. First time homebuyers are being limited in the amount of home they can afford through amortization restrictions, higher qualification rates, and of course the obvious – higher interest rates. One of the ways to assist your sale is to offer your existing mortgage if the contract states that it is assumable. If you are sitting at a sub 3% interest rate then adding this fact to your feature sheet can raise additional interest from potential buyers.
As we look ahead to 2014 – the only real prediction for the real estate industry is change. With the reality of a rising interest rate environment upon us – more proposed government restrictions to mortgages being suggested – as well as a hot Edmonton real estate market and rising prices – it is important for both buyers and sellers to take note and do their homework well ahead of making a move.