Toronto Area Housing Prices On The Rise – Now’s A Great Time To Refinance Your Mortgage!
Market indicators suggest price growth in Canadian real estate, according to the economic research firm Capital Economics. The ratio of home sales and new listings has once again reached 60%, meaning that 6 homes out of 10 that are listed are sold. Such a strong seller’s market creates competition between buyers for properties, pressuring home prices to rise. Historically, a ratio at this level has resulted in annual home price increases of at least 10% in Canada. However, this ratio has overestimated predicted price growth in the past year, leading economists to forecast a 3 to 5% rate of price growth for homes by the beginning of next year.
A decrease in interest rates for borrowers has largely contributed to the predicted surge in Canadian housing prices. Prospective homebuyers shopping for a mortgage have received on average a 2.65% rate for a five-year fixed mortgage in July, almost 80 bps lower than the 3.43% average rate for the same type of mortgage in March. The reduced average interest rates in July has resulted in buyers affording to pay 19% more each month towards their mortgage, in comparison to March of this year. However, mortgage rates have still not sunk down to levels found in 2017, and the mortgage stress test, which requires buyers to qualify for a mortgage at an inflated rate, continues to be a barrier for some buyers.
For the time being, home prices are expected to plateau until the beginning of 2020, despite the recent increase in sales this month. Although home sales picked up by 12.6% in the month of July, prices have only increased by a mere 0.2%. However, Steven Tulman, the President of Clover Mortgage, suggests that “despite the Bank of Canada trying to avoid home prices accelerating much faster than income, the BOC is expected to decrease interest rates further, except in the case of a significant increase in the sales to new listings ratio. Therefore, the trend towards a stronger seller’s market will persist with fierce competition between buyers for properties, causing price growth for Canadian real estate in the future”.
Do not miss out on the low interest rates available by letting a knowledgeable mortgage broker from Clover Mortgage find the best mortgage for you at the lowest rate. Are you worried about the mortgage stress test? We have partnerships with over 50 diverse lenders to help you find a mortgage for your dream home. With prices for Canadian real estate expected to rise and low borrowing rates, it is the ideal time to invest in a property. Our dedicated residential mortgage broker team will help find the optimal mortgage deal to suit your needs.
Call or text us today at 416-674-6222 or toll free at 1-800-673-2230, or email us at firstname.lastname@example.org to speak with a licenced mortgage broker and get your free no-obligation mortgage consultation.