White House Mortgages - Dominion Lending Centres

I would like to address a very common point of discussion that I have been having recently: What do I think is going to happen with the real estate market and mortgage rates? I firmly believe in the “real estate cycle” which runs 10 to 12 years depending on the economy. For example: I would say that the price for your average home peaked in 2007 and then held steady until the fall of 2008. During that year the multi-million dollar residences drove the market followed by condos. By September of 2008 there were significantly more residential properties up for sale than there were buyers and that helped lead the freefall in that market. Condominiums were sprouting up everywhere and as that market became oversaturated and overpriced it experienced an absolute drumming. According to the cycle, the next peak is projected to be 2018, and that makes the half cycle or low point, 2013. Does that mean that housing prices will continue to decline up to that time, no. I think there will be a period of flat-lining where the market remains steady first, and once the economy takes hold will begin to rise again. With regards to mortgage rates we have had it good for the last three years and until a couple of months ago you could get a variable at 2.1% and a 5 year fixed at 3.29%. Today you are more likely to see the variable at 2.8% and the fixed around 3.49%. Will lower rates come back? It’s possible. The economy will keep the prime rate in check however that doesn’t stop Lenders from discontinuing their discounts or even adding a premium to the variable rate. Fixed rates will relax when the yield on Corporate Bonds decrease. My take: Back in 2007 – 2008 housing prices were at an all time high, interest rates were between 5.5% – 6.25% and multiple buyers were entering into bidding wars on some homes. Today those same homes are substantially lower in price, (some by well over $100K), interest rates are half of what they were back then, and now those buyers that could be in the market are sitting back and doing nothing. That is crazy! In a purchase situation: With your specific situation in mind, I would still be hunting out a variable rate because of the options it gives you up the road. If the big discounts return, with only a 3 month interest penalty that new rate becomes available and you still have the option to grab a fixed rate in the future. Caution, just because a Lender might have a low rate, doesn’t mean the mortgage is in your best interest. That is why you have a Mortgage Broker, I discuss what is important to you and match that up with the best rates out there. In a refinance situation: Thought process is similar, the only thing different is the discipline. If borrowing equity from your home is going to pay out high interest debt you can achieve two things, you can lower your overall payments, and you can pay substantially less interest. If you can get into the habit of making bulk payments with your annual savings you will chop years off your mortgage and get you back to where you were without the extra debt. What to do: By waiting to see if prices or interest rates are going to drop further, eventually trends will reverse and even if you don’t get caught in the upswing who knows whether it will be any better than it is today. The problem is that the new best rate you can get will probably only be for five years because by maturity it is almost a guarantee the rates will be higher. If you were to act now, you might achieve six and a half years of low rates at a time when your mortgage is most likely at its highest. Promotion: I am always looking for ways to promote my business and build my client base. Until the end of the year for anyone who sends me a referral you will be entered into a draw for two Kelowna Rockets hockey tickets. This can be a purchase or a refinance situation. One chance for every referral, and please be sure to advise this person that you are sending me their contact information and that I will be calling them. For every one of those referrals that turns into a funded deal where the Lender pays me a fee, you will receive a pair of Rockets tickets. Contest begins November 1, 2011 and ends December 31st, 2011.