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INTEREST RATES ARE DOWN
The Bank of Canada announced a cut to its key interest rate to 4.25 per cent on September 4th. What does this mean? As CBC reports, “buying a house could be a lot more affordable because mortgage rates will be lower than they were a few months ago”. Two more Bank of Canada rate announcements are scheduled this year: October 23 and December 11, with economic experts predicting more interest rate cuts to come. These rate cuts can potentially enhance your buying power; however, as more buyers enter the market, property prices are expected to rise, making now the right time to secure your new home before costs increase.
HOME PRICES + RENT GOING UP
Government projections suggest an additional 1.3 million more homes are needed to level out supply and increasing demand. Various factors are pushing this housing demand, most notable is a population increase outlined in the Household Formation and the Housing Stock report from the Parliamentary Budget Officer, which states that “Canada’s population grew by 1.2 million people (2.9 per cent)—the highest growth rate since 1957”. The increase in population is driving up housing demand, which also leads to land prices increasing compared to previous years—costs that ultimately add more dollars to a final home price. Match that with rental prices continuing to climb, and it’s all adding up to the right time to start paying your own mortgage instead of someone else’s.
30 YEAR MORTGAGE OPTION*
In late July, the federal government announced it would allow “30 year mortgages for first-time buyers of new builds”. This significant change to mortgage rules would allow an additional five years to pay off a mortgage, which is anticipated to help create more opportunities for Millennials and Gen Z’s to buy a new home. Since this can significantly reduce monthly costs, this program is expected to increase demand, which could lead to higher construction costs and longer build times, so acting now to get the right home for you and your family is crucial.
*For first-time home buyers buying a new build.
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