Low Interest Rates Making Home Ownership Affordable

RBC reports on Friday that housing affordability improved slightly in the third quarter, after two consecutive quarters when things got worse. full story

The bank says affordability levels rose for all housing categories, although most improvements were less than one per cent.

Royal's affordability measure for Vancouver fell slightly from the previous quarter, but remained above 90 per cent.

Toronto is next in the index at 52.1 percent, Montreal is at 40.9, Ottawa 40.8, Calgary 37.6, and Edmonton 33.2.

A reading of 50 percent means homeownership costs take up 50 percent of a typical household’s monthly pre-tax income. The higher the rate, the higher the cost.

"Elevated uncertainty relating to the European sovereign-debt crisis and the downside risk for economic growth have contributed to keeping interest rates at low levels," said Craig Wright, RBC chief economist.

Those lower rates are helping to cushion the impact of rising home prices in many cities even as the economy slow and consumer confidence weakens.

RBC forecasts that interest rates will remain exceptionally low in Canada until mid-2012 and rise gradually after that.

On Wednesday, Governor Mark Carney said that the Bank of Canada will keep its key interest rate at its current low 1 percent, in part because the European debt crisis "appears barely contained". read more

Antonia Yan

Antonia Yan

Sales Representative
CENTURY 21 Leading Edge Realty Inc., Brokerage*
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