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In the last quarter of 2006 the question most frequently asked of me
was “what do you think the real estate market will do in 2007?” Well
the final tally for the first quarter of this year is not in just yet,
but it looks like a very healthy start to the year. Let’s look at some
of the major factors contributing to this market.
One – not only can you now buy a home with only a 5% down payment,
some institutions will actually allow “no down payment”. Of course in
all cases you must have the income to qualify to carry the mortgage in
question. We now have high ratio financing up to 90% on rental
properties and 80% of the market rent to qualify. This will activate
higher insurance premiums.
Second – it is now acceptable practice to acquire a 40-year amortized
mortgage. So in other words you can now spread your payments over 40
years as opposed to only 25 years, in turn making your monthly
payments lower and more affordable. Many lending in institutions
however, are asking for these 40-year amortized mortgages to be
insured.
Third – interest rates are still very favourable. With 1 to 5-year
posted rates hovering around 6.5% and the 7-year rate hovering around
6.75% (very marginal for two more years of security), the lending
institutions are signalling at the moment stability, they are not
trying to gently guide the masses one way or another. For your
convenience, the current mortgage rates are always available on my
website – CaledonEstates.com, VaughanEstates.com and
BetterBramptonHomes.com.
Fourth – the deciding factor for the first quarter of 2007 – the
inventory of homes in general is low, sustaining house prices and in
some areas moderate increases in pricing; it is still a sellers
market. The inventory of homes has to change for the market to change.
The 40-year amortization will definitely soften the blow when the
market does shift.
If I can be of any help to you, your friends, relatives
or associates, please do not hesitate to
contact me. Your referrals are greatly appreciated. |
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