Five-year mortgage rates below four per cent
Deb Abbey
Van. Courier
According to the Real Estate Board of Greater Vancouver [REBGV], May sales of residential properties in Greater Vancouver increased seven per cent over the same period last year and 4.7 per cent over last month. The market is steady, but has slowed down considerably from the frenetic pace we saw in February and March. Hockey anyone? Of the properties that have sold on MLS so far this year, 21 per cent have sold for more than $1 million and 20 per cent have sold for $350,000 or less. The MLSLink Housing Price Index (HPI), the benchmark price for all types of residential properties in Greater Vancouver, has increased 6.2 percent, from $590,662 in May 2010 to $627,568 in May 2011. If you’re browsing the MLS listings, you’ll be hard-pressed to find a house in Vancouver at that price level unless it’s on a tiny lot in East Van and/or the house is a fixer upper–meaning tear-down. That’s because this version of the HPI tracks the price movement of “middle of the range” homes of all types, including condos, in Greater Vancouver. The Board uses benchmark pricing that excludes the extremely high and low-end properties and provides a clearer picture of market trends than average pricing would. It works for overall market trends, but if you’re looking for a single family home, a townhouse or a condo, the benchmark price of “all types” of homes doesn’t help much. To make it work for buyers and sellers in different segments of the market, they’ve broken out benchmark prices for single family homes, attached properties (such as duplexes and townhouses) and apartments. The benchmark price of single family homes in Greater Vancouver has risen 10 per cent in the past year to $890,833. Attached property (townhouses, duplexes, etc.) prices are up 3.5 per cent to $517,787. Condos are up 2.2 per cent to $407,419. Depending on the type of property that you own or would like to buy, these numbers will give you a better sense of market trends in your part of the market. If you go to the REBGV website (rebgv.org/housing-price-index), you can customize the HPI to see what the numbers look like in your area. On the interest rate front, for most of the past decade, five-year fixed term mortgage rates have been at historically low levels in Canada. They started bumping up near the end of 2010, and since then we’ve heard a lot of talk of rates increasing over the next 18 months. If you’ve been paying more attention to hockey scores than mortgage rates, you may not have noticed that there’s been a reprieve –at least short-term. In the past few weeks, falling commodity prices and concerns about European debt have had investors looking for a safe haven in the bond market and that’s dragged down bond yields. Fixed-rate mortgages are tied to the yield on government bonds so they’ve come down as well. If you’re planning to buy a home, it’s a good time to get pre-approved and lock in a rate. A number of lenders are offering rates below four per cent for five-year fixed terms. The credit unions have been offering the lowest rates recently, but with lower bond yields stabilizing, the banks are playing catch-up. If you have a relationship with a bank or credit union, check out the current mortgage rates in B.C. on one of the many websites that track them before you apply for your mortgage loan. It’s a good starting point if you’re trying to negotiate a lower rate with your financial institution. Alternatively, a good mortgage broker can prequalify you and help you find the lowest rates available from many of the banks and credit unions. Before you agree to anything, make sure that you understand all the features of your lower rate mortgage. Pre-payment options and penalty clauses can have a huge impact on the actual cost of your financing. Sometimes it’s better to have a slightly higher rate with better bells and whistles. Deb Abbey is a real estate agent at Royal LePage City Centre in Vancouver. She is the author of two best-selling books on sustainable investment. Contact her at deb@abbeypartners.ca. © Copyright (c) Vancouver Courier