Rise in interest rates expected in 2014
Buying your first home is one of the biggest decisions you will ever make.
While 31 per cent of first-time homebuyers expect interest rates to stay the same over the next five years, that just may not be the case, according to market projections.
BMO Economics reports that interest rate hikes are expected in the second half of 2014.
"It remains vital for Canadians -- particularly homeowners -- to be prepared for the inevitable rise in interest rates," she says.
Across the country, those living in Ontario are expecting rates to remain the same (32 per cent); while those living in the Prairies are less optimistic (27 per cent).
The BMO First-Time Homebuyers' Report found that a majority of first-time buyers (76 per cent) are willing to "stress-test" their first mortgage against a higher interest rate.
Those in Ontario (80 per cent) are the most likely to stress-test their mortgage, while those in the Atlantic provinces are least likely (62 per cent).
Hinojosa adds, "For both first-time and repeat buyers, it's essential to stress-test their mortgage against a higher interest rate to ensure they can manage a rise in costs as a result of any potential increases in interest rates down the road.
"It's also wise to choose a mortgage with a shorter amortization, which can help homeowners become mortgage-free sooner."
Before house hunting it makes good sense to do your research as well as get pre-approved for a mortgage so that you know just how much house you can qualify for before you set foot in open houses.
However, even if you have been pre-approved for a substantial mortgage, make sure you can actually afford to carry it. Carefully go over your budget to see how much mortgage you can realistically afford without compromising the lifestyle you want to live.
You can use a handy online mortgage calculator to give you an idea of how much you can afford and other homebuying tools that are available.
By Donna Donaldson, MSN Money
Are you planning on buying your first home? Are you concerned about an increase in interest rates and your ability to carry a mortgage?
Posted by: R Miller | Jul 4, 2021 5:59:21 PM
I am so weary of banks trying to push their interest rates up prematurely. Seriously, we all know you want to raise rates to make more money but have a gander at the EU and stop trying to scare Canadians.
Posted by: Steve Skinner | Jul 4, 2021 7:04:37 PM
You are so full of shit....need to increase interest rates to stress test yourself to see if you can afford an increase!..If a homeowner wanted to raise his mortgage, all he has to do is go to the bank and increase his payments10%. Banks are nothing but money hungry thieves!!!! and if the government wasn't so deep in bed with banks there should be a law to restrict banks from gouging the consumer as much as they do!....A Billion dollars profit every quarter is just pure greed!
Posted by: Axe | Jul 4, 2021 10:29:58 PM
It is not just a billion the banks make more like RECORD PROFITS every quarter even when all others are struggling.
Posted by: B | Jul 5, 2021 9:53:26 AM
I don't get why people are upset that some busines are making profits. Just stop using their services. Stop borrowing more than you can afford and the banks won't make that much profits. Who is at fault, the guy that lends at a high rate or the guy that accept to borrow at that rate? If you can't afford the rate, don't borrow?
Posted by: Don | Jul 5, 2021 6:59:10 PM
I don't think this is a bad thing. I am 15 years away from retirement and lost 1/2 of what I had put away in the crash of 2008. It is now just recovering to what it was in 2007. If rates don't increase inflation will mean the dollar I saved wont be enough to support me. I guess if you want to try to support all the pensioners just so you can keep a house you could not really afford to buy...OK then. I have saved for my retirement since my early 20's and was told if I did this the money would be there. I don't want to burden anyone and have really tried to plan for my retirement and know I have much more saved than many of my peer group. Guess what....they were wrong....their estimates out to lunch and I am trying to save more. With taxes taking 50% and the "experts" now saying you have to save 20% for retirement....that leaves 30% of our gross to buy a house, raise a family etc etc. Not sure how anyone outside the 1% is going to mange that! I would never want to go back to the 18% mortgage rates of the 80's but there has to be enough of an increase to offset inflation when you look at the massive amounts of people going to retire in the next 20 years. I fear interest rates that sit below inflation will cost more pain in the long run than a small interest rate increase.
Posted by: This is stealing our money ! | Jul 19, 2021 12:15:25 PM
This is crime from Banks and Bank of Canada to use Canadian people savings as free money without of any interest. Inflation is higher and higher from the time when the one ounce of Gold was around $ 20 to $24 US in 1971. This is like stolen money from mouth of families and their children dear Bankers. Stop This looting or leave.
Posted by: This is stealing our money ! | Jul 19, 2021 12:31:06 PM
Forgive me Canadians to give to looting our money by Banks proper name, and it is :
" Ponzi Scheme" from RBC Mr. Bernie a Banker from Calgary.
Posted by: This is stealing our money ! | Jul 19, 2021 2:58:06 PM
RBC - Royal Bank says its special discounted four-, five-, seven-, and ten- year mortgage rates are going up to 3.39, 3.69, 3.99 and 4.29 percent respectively. This is criminal compering with what we Canadians getting from our savings giving for free to the banks, just about slightly above 0% interest rates from any amount of savings. This is recipe for another Recession and much, much more.
Posted by: Roger | Aug 11, 2021 10:38:15 AM
We had a "loan" from CIBC for our mini-home at 8.25%, raised to that because we were in "Credit Counselling" due to job loss. Thanks for the kick while we were down, CIBC. After our recovery we got a mortgage at TD Canada Trust at 3% floating rate, but kept the payment the same. 25 year amortization with double payments, will shorten that a lot. Locked in for 5 years at 2.89%, payments still the same. When the car is paid off next March we will apply that to the mortgage as lump sum payments. This will pay off our 25 year mortgage in a total of 8 years. If times get tough, we can always back off to the regular payments. I think that is the best of both worlds. I like that flexibility.