If you're waiting for prices to drop further you may want to consider how much you may have to pay for the money itself. Experts are now saying that we won't see any further reductions in mortgage rates which means that the only change will be upward.
Higher mortgage rates will almost certainly offset any further price reductions in the, already low cost, housing market. Most first time buyers are already starting to move as the end of the cost reductions may already be at hand.
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April 14 (Bloomberg) -- Mortgage rates in Canada, which have plunged by almost 50 percent in the last year, aren't likely to fall further, said Phil Soper, chief executive officer of Brookfield Real Estate Services Fund.
"Certainly with the Bank of Canada's target rate set at virtually zero, there's very little room," Soper said today at a conference in Toronto on Canada's real estate market. The rate is "the lowest it's been in anyone in this room's lifetime."
Rates for home loans have been dropping during the biggest financial crisis since the Great Depression, with some lenders offering mortgages approaching 4 percent, Soper said. That compares with an average posted five-year rate of 7.5 percent a year ago, according to the Bank of Canada. He added that home prices in Canada aren't likely to rise "sharply" over the next two years.
Bank of Montreal, which sponsored the conference, lowered its rate for a five-year fixed-rate mortgage this month to 4.15 percent.
"We are approaching almost zero interest rates," at the Bank of Canada, said John Turner, the Toronto-based bank's director of mortgages. "The question becomes, how much upward pressure will there be as we come out of this recession?"
The Bank of Canada last month cut its benchmark lending rate to 0.5 percent, its lowest ever, and said it's preparing to use policies beyond interest rate moves to revive an economy hit by a recession and tight credit markets. The next rate announcement is April 21.
Canadian existing home sales rose in February for the first time since September as buyers took advantage of lower mortgage rates and prices, according to the Canadian Real Estate Association's Multiple Listing Service. Sales of existing homes rose 8.6 percent from January to 28,669 units.
Bank of Montreal senior economist Sal Guatieri predicted that Canada's housing market will decline further this year, without the "crash" experienced in the U.S.
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