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More Jobs = Higher Interest Rates

General Angela Calla 16 Feb

Here we go, again. The economy is generating more jobs, a handful of banks raise mortgage rates and all of a sudden you’re being advised to lock in your mortgage before the bank doors slam shut. In fact, some say you’d better hurry up and buy a house now before mortgage rates go so high you’re locked out of the housing market forever.


This is not the first time that mortgage rates are on the brink of blooming only to fade a few months later. This has happened more than a handful of times in the last decade. The headlines are often the same. A month or two of increasing mortgage rates, the public is urged to act now, and then a few months later something unforeseen appears on the horizon.


The last occasion was just over a year ago. The posted five-year mortgage rate in March 2010 went from 4.7% to 5.15% in April, and then to 5.3% by May. The recommendations were clear: lock in. But then, by October they were back to 4.5%. The economy sputtered, Greece and Spain hit the headlines and the rest was history.


Don’t get me wrong. Short-term interest rates are abnormally low today and the Bank of Canada has pledged to raise them eventually. But that is a far cry from advocating that you lock in your mortgage – which is actually driven by long-term bond market rates – or heaven forbid using this as an excuse to buy a house you can’t really afford.


Click here to read the full article from The Star.


The commercial real estate market saw an unprecedented recovery last year, with investment growing 48% as the economy improved and investors returned to the market.


Canadian commercial real estate sales volume reached $18.9 billion in 2010, according to CB Richard Ellis, from $12.7 billion in 2009 – though it’s still a long way from the $19.8 billion posted in 2005.


“Once we were a few weeks into 2010, we could feel momentum picking up so that by the year-end, we were about where we expected it to be,” said John O’Bryan, CBRE’s Vice Chairman. “It was really a coast-to-coast recovery – something we haven’t seen before.”


The only market that didn’t see an increase in volume was London, Ontario. Toronto finished the year with $7.4 billion in trades, up from $3.8 billion in 2009 as volume grew by 95%. 


Click here to read more in the Globe and Mail.


The resurgence of the loonie and continued degradation of US home prices are spurring more Canadians to invest in property south of the border. But while this may appear an opportune time to snatch up a retirement home or dream vacation property, experts warn that jumping into these major purchases without doing extensive research is a recipe for disaster. 


The list of things to consider before buying in the United States is long, ranging from estate taxes to property maintenance to insurance. 


“There are lots of things that most people don’t think about,” says Laura Parsons, a mortgage expert with Bank of Montreal. “I know quite a few people who went into the market in the US without a lot of knowledge about what that means.” 


First and foremost, experts caution that speculative investments in US real estate continue to be a roll of the dice. 


Click here to read for the full details in the Globe and Mail.