This week, the National Post was asking: are historically low mortgage rates in Canada a “Christmas Miracle?” Apparently, borrowing costs are down right now despite it being an off-season for the housing market.
This will probably come as a relief to many potential buyers. Earlier this year, most of Canada’s big banks hiked up their mortgage rates in response to the U.S. recovery. If you are looking for information on the best Canadian mortgage rates, then here are three tips you can keep in mind for the end of 2013, and the beginning of 2014.
1. The Current State of Canadian Homeowners
About 9.2 million Canadians own their home, according to Statistics Canada, and this accounts for about 69% of the population, comparable to home ownership rates in the U.S. Unlike the U.S., however, Canada does not have a foreclosure problem; people who own their homes are not likely to default on their mortgage payments, with fewer than 1% of all mortgages in arrears.
2. What are the Average Mortgage Rates Today?
According to The Globe and Mail, most economists have predicted a 5% prime rate as the overall average for the next few years. However, low mortgage rates seem to be the norm right now. Because inflation is very low- 1.1%- it’s possible that prime rates will average in at 4 to 4.25% for the long term. Of course, as they point out, rates can rise or fall very rapidly and predicting the “new normal” for mortgage rates is just that- a prediction.
3. What Will Your Mortgage Rate Be?
The Canada Housing and Mortgage Corporation recommends first making an in-depth evaluation of what owning a home will entail, financial problems you might encounter, and how you will manage mortgage payments before buying a home. To find out what your approximate mortgage will be, there are multiple websites that now provide free mortgage rate calculators for you to use. This will give you a better idea of what homes you can and can’t afford.
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