The Bank of Canada is warning consumers about the possibility of higher interest rates coming, and wants consumers to factor that into their mortgage payments in the future. While many individuals are buying homes right now, which are pushing up the real estate market and the economy in general, they are doing so with low interest rates, which currently stand at a record low of .25 percent.
While the interest rates are going to remain low until June, they will be going up at that point and that means higher payments for those with variable mortgages and those who have fixed-five year mortgages.
When the interest rates get to more normal levels that will mean that a lot of homeowners will not be able to afford their mortgages. The problem with this is that it can create a breakdown in the housing market, like the United States saw in 2008.
The Bank of Canada did a stress-test analysis of household finances and found that roughly one in 10 Canadians will need to devote 40 percent of their income to paying debts. That means at least 10 percent of the population will be falling behind on their mortgages when the interest rate increases according to the Bank of Canada.
While the Bank of Canada has stated that it will not be raising interest rates until June, they did say that if inflation increases, then the interest rate will go up sooner, which could put added stress on homeowners who may not be ready for the increase in their mortgage payments several months ahead of time.
However, it was not all doom and gloom from the Bank of Canada. They did state that they expect the country will come completely out of recession within the next few months, due in no small part to the booming real estate market. Even if there is some trouble ahead for homeowners who may not be able to afford higher interest rates on their homes, the economy will still continue to grow, and that will help everyone.
Overall, it is important that homeowners make sure they pay attention to how much they are going to be owing if the interest rate goes up, or at least when it goes up. By planning ahead, they can prevent disaster down the road and that is important in order to keep from falling deeper into debt.
Posted: 2009-12-29 09:30:25
Want to sell condo Toronto? If yes then you are at the right place. At Canada, especially in Toronto your search for a perfect real estate broker to find out best Toronto Condo for Sale can’t end at a better place. I Marco Momeni, assures you best value for your condo and unmatched customer service at most competitive cost. I can even help you make your condo more attractive so that we can finish the whole transaction and selling procedure in least possible time. Selling a condominium in Toronto is a very herculean task. And if you want to try to sell condo Toronto all by yourself then the whole process will be nightmarish. So let me handle your Toronto condo for sale, I guarantee you best value at most affordable price. I even have the experience to take care of all the legal procedures such as preparation of agreement papers and various other necessary things which are required at the time of condo selling. We are committed to strike the best deal for your Toronto condo for sale by finding out the most suitable person or family who can pay you correct amount. I can achieve this by utilizing mine as well as your network of family, friends, neighbors, office colleague etc. I even strive hard enough to popularize your Toronto condo for sale by using internet, print and visual medium, and various other advanced advertising and marketing techniques. As I have years of experience selling, buying and renting properties in Canada and especially in Toronto, We know in great detail about the important factors that makes difference in sealing a deal. Using all these knowledge, I give my clients many inputs and advices about staging their property which makes them more attractive and gets them better return on that.