Owen Blogs about how Ottawa is warning that Canadians may be taking on
more debt than they can handle. Last week our Bank of Canada Governor
Mark Carney and Finance Minister Jim Flaherty warned that Canadians need
to be careful with these record low mortgage rates that are being
offered. They feel that many people are taking on too much debt. This
was brought about when The Bank of Montreal introduced a 5 year fixed
rate mortgage at 2.99%. Since then most of the other major banks have
matched this record low rate. I have to agree with Mr. Carney and Mr.
Flaherty on this one. I have been advising my clients to expect higher
interest rates in the future and to prepare for those higher rates now.
Don't get me wrong, these record low rates are a fantastic offer and
it's currently a great time to be a buyer of real estate. Especially if
you're a first time buyer and can buy a 1 bedroom condo for about the
same as you're paying for rent right now. Just keep in mind that
interest rates have no where to go from here but up and that you should
plan on having your mortgage payments increase sometime over the life of
your mortgage. So, for that reason, maybe leave a little money on the
table. Just because the bank is willing to lend you $500,000 doesn't
mean you have to take all of it. Remember that's a 25 year mortgage.
Sure, your payments are locked in for the first 5 years but who knows
where interest rates will be after that? Personally I advise my clients
to be conservative and plan ahead for a possible increase in your
interest rate down the road. By all means try and take advantage of
these rates...I sure am. Just don't get greedy, perhaps buy something
slightly below what your maximum mortgage approval comes in at. Or start
a small side fund where you are setting aside some extra money each
month for when those rates eventually do go up.
This entry was posted on January 26th, 2012 by Owen Bigland | Posted in Video Blog