There is a lot of speculation about the real estate market and interest rates this year. The only consensus about rates is that they will go up, but when? Here is and article from David Rosenberg, financial columnist and strategist, who suggests this year is not the year for an interest rate hike this summer. Click here for the entire article
Jeremy Torobin, TD-Canada Trust head economist, supports that theory. Here are his comments on interest rate hikes this summer.
I have a sense from the pulse on the street that people are being more cautious this year with everything but especially with major purchases such as real estate. People ask me "where are interest rates going and how's the market?". The short answer is that we are optimistic and are slowly, and I emphasize very slowly, emerging from a nasty recession that still isn't over and has the possibility of a double dip. Having said that, the fundamentals here in Canada are good for a slow sustained recovery provided we don't get things that derail recovery. Those things are, for the most part uncontrollable, but do affect consumer confidence which is a large factor out on the street. They include the U.S. economy, the world economy and government policy. Looming here in Ontario on July 1st is the blended HST (Harmonized Sales Tax) which will not only cost consumers (see last month's blog) but also have an effect on consumer confidence.
I alwys say don't try to time the market, either real estate or mortgage. Buy when you are ready, pay it off as soon as you can and enjoy life. This advice also applies to first-time buyers, sellers moving up or investors. If you have built up wealth and can leverage that to buy an investment or dream home. The simple fact is the sooner you have real estate and either start paying it off or have someone pay it off for you (tenants), then the greater your wealth, over time. That's the key- over time. Because real estate is a longterm investment, what happens in the short term is not a factor- rates go up and down and real estate prices go up and down.
We are big fans of variable rates because they allow you to pay less in your monthly payment and to pay off larger pieces of your mortgage without penalties thus reducing you principal. We are working on a great new tool that, blended with our real estate and mortgage advice, will help you pay off your mortgage much faster and will send you an email invite to introduce that soon. As always, you are welcome to comment.