Ontario Mortgage Rates in Comparison

mortgage canadaFirst-time home buyers in Canada have a lot to consider as they contemplate the large purchase of a home in their near future. Analyzing the risks of a long-term mortgage has always been an important part of buying a home, but it has become an even more critical step in the wake of the recent global financial crisis; the experience of their southern neighbor’s creation of a housing bubble, subsequent burst, and eventual economic recession is an ever-present reminder of the importance of getting a mortgage that will stand-up even in turbulent economic times.

Unfortunately, the Bank of Montreal recently released a report on the mindset of first-time home buyers toward the stability of interest rates, and the results do not jive with research done by economists from the same institution.

Bank of Montreal economists predict that the central Bank of Canada is set to increase the lending rate in the second half of 2014. First time home-buyers need to pay special attention to these predictions, as borrowing an adjustable rate mortgage just prior to a rate increase can lead to an unpleasant and potential surprising payment increase come adjustment time.

While Ontario mortgage rates are just as vulnerable as any other provinces to be effected by the potential interest rate hike, individuals living in Ontario are said to be the most confident that interest rates will hold steady over the next half decade, at 34 per cent. Despite that fact though, Ontarians are taking steps to ensure they will be able to make their payments if rates do increase. In the event that Ontario mortgage rates do rise, 80 per cent of Ontarians have tested their mortgages against higher interest rates to make sure they remain affordable beyond the short-term.

The rise in interest rates is a double-edged sword. It is undoubtedly a sign of a strengthening economy; however it can also make buying a home more difficult. As interest rates increase, mortgages become more expensive. The housing market goes from a buyer’s market of depressed prices and low borrowing rates, to a seller’s market of increased prices and high borrowing rates. As the market makes the transition from one to the other, it is imperative that buyers look at more than just the short-term affordability of a mortgage.

A recent survey released by the Bank of Montreal shows that all across Canada people are considering delaying the purchase of their first home. In Vancouver 33 per cent of potential buyers may opt to wait, and the potential effect of rising interest rates on Ontario mortgage rates may convince 11 per cent of buyers to hold off. Other regions such as Prairies and Atlantic Canada reported 25 and 28 per cent respectively.

When it comes to buying a first home, whether it is in Ontario or Orlando, it is vitally important that buyers familiarize themselves with the economic environment they are purchasing in; Short-term savings are not always worth it in the long-run.

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