Typically, buying a home is just the first step in loosening the purse strings, albeit the biggest!
Home buying generates a wave of activity as the new owners spend money on improving their new acquisition to enhance their enjoyment. The "National Association of Home Builders in the United States, (NAHB), shows that a home purchase triggers a series of additional spending on appliances, furnishings, and remodelling activities that exceed typical spending levels of non-moving owners and persists for two years after moving" the report says. Although this quote is from the United States, the biggest ticket item for all households is bedroom furnishings, including mattresses. For these buyers of new homes the expenditure is twice as much as existing home buyers and outspend non-moving owners by six times.
How does this relate to Canadians? While the report relating to how Canadians spend their money after first acquiring a new or resale home is yet to be published, we in the real estate industry know that we are not that far distant to the same moving trends and habits. We know for a fact that we inject money into the redecorating, remodeling industry and the hiring of all kinds of experts in the plumbing, flooring, painting, besides purchasing new living/dining room furniture etc.
How to Select a mortgage in today's market.
The good news is that as all mortgage rates continue to fall, homeowners looking to renew their mortgages can get some GREAT deals. However it must be noted that those people who are interested in securing a good rate are also likely to be analyzing their own wider financial well-being, taking into consideration the increasing job losses, stock market routs and the recession.
Knowledge is power! It is very advisable to consult with a mortgage broker 120 days before your renewal date because rates may be held for 120 days. It is worth repeating. The overall mortgage rate environment in Canada is exceedingly good! You can get a five-year fixed mortgage for less than 5%....there have been increases in the VARIABLE rate product.....it used to be that there was a discount of 1%, toay the best you can do is probably prime plus 0.6%. This means that as the prime rate has fallen (to 3% as of this week), VARIABLE ratee customers could be looking at a rate as low as 3.6%. The difference in those rates is really the insurance premium for the peace of mind you are going to get by locking in your rate. Many economists expect rates to continue to decline.
"Going into the second half of this year, we will start to see a lower mortgage rate," says James Marple, economist in economic forcasting at TD Economics. "Going into 2010 we are starting to see signs of an economic recovery...we start to see inflation picking up and we will see short-term interest rates rise." It is crucial to ask lots of questions and not only about the rate. If you are thinking of moving house in the near future, check whether your mortgage is portable without penalty if, for example if you move to another area, so analyzing it in detail is CRUCIAL.
"If you are not satisfied with the answers you are getting, then go to somebody else," says Mr. Murphy. "The rate environment itself is low and going lower. I think that the lenders are trying to provide the best products that they can in uncertain times."