The Bank of Canada is holding its key interest rate at 0.75 per cent and isn’t expected to increase borrowing costs until late this year or possibly 2016, which is good news for those looking at mortgages to buy a house.
“Right now the mortgage market is really hot,” said Atrina Kouroshnia, an independent Vancouver mortgage broker and founder of the mortgage rate comparison website LavaRates.ca. “Mortgage interest rates being so low has really helped the market.”
Low mortgage rates are especially beneficial in competitive residential real estate markets like Vancouver and Toronto, where it’s common for people to put in multiple offers to try and wrest their dream home away from other interested buyers. Knowing they’ve secured a low mortgage rate can give them the confidence to make a higher offer on a property.
Stay focused on your budget
“Always stay focused on the budget because it’s something you have more control over. No one can say for sure what will happen with rates,” said Kouroshnia.
“I always tell people to go with what you can afford and go with what makes sense for you. If rates go higher, you shouldn’t be at the top of your mortgage range so there’s room for you to adjust to it. And if rates go lower, you’re laughing because you have an extra payment that you can make toward your mortgage.”
Kouroshnia advises people to look at their take-home incomes as opposed to their higher total salaries when calculating how much they can afford to spend on a house because it gives them a more realistic idea when setting budgets to suit their lifestyle and comfort level.
Consider more than low rates when choosing a mortgage
A low interest rate is just one of the things that should be taken into consideration when securing a mortgage, however, and Kouroshnia also warns against being blinded by cash incentives and other offers that may look immediately attractive but could have negative repercussions down the road.
“Look at how flexible the mortgage is in the long term because a lot of people don’t like to think about penalties or going out of the mortgage, but the reality is that if you’re not prepared for it then you’re not in a good place. Look at all aspects of it. I think an independent broker can really explain those things better than going to your bank because they can just offer you that one product, which may or may not be suitable to your needs.”
LavaRates.ca launched last April and, while it has a British Columbia focus, many of the blog entries posted on the site deal with broader real estate issues and most of the lenders featured on it are national, so the rates they offer are the same across the country.
More favourable rates may be found in large cities, however, as Kouroshnia said some lenders aren’t interested in dealing with larger properties in remote areas, which can limit consumer choice.
“You have more options in urban areas, which could mean more competitive rates,” she added.
Competition among mortgage rate comparison sites
LavaRates.ca joins other established Canadian mortgage rate comparison sites — including RateSupermarket.ca, RateHub, RateSpy.com, LowestRates.ca, Super Brokers, CompareMyRates and RateBot.ca — which were created to provide up-to-date information to help homebuyers make mortgage decisions.
A few hundred visitors daily check out LavaRates.ca, which earns advertising revenue and is used by Kouroshnia for business lead generation. In addition to writing blog entries for the site, she also contributes to Real Estate News Exchange, Huffington Post Canada and Real Estate Weekly and has published a comprehensive home-buying guide that can be downloaded for free from LavaRates.ca in an effort to raise her profile as an independent mortgage broker and build her rate comparison site’s traffic.
“It’s going well,” said Kouroshnia. “It’s definitely becoming more and more noticed by different people.”