Random Thoughts ... Canadian Mortgages and Rates... The Trickle Down Effect on The Economy
It is estimated that each MLS home Sale generates slightly over $46,000.00 in ancillary spending. That's over 22 billion dollars a year.
It's a Fact - Rising Interest rates are reflected in the overall Canadian economy.
Rising rates may slow the real estate market slightly but there should be a greater concern for the effect on the overall Canadian economy than the effect on the real estate market. People will still need to move and have a place to call home but they may not spend as much on new furniture, appliances or renovations for that new home.
With the potential to affect over 200 thousand home sale related jobs across Canada rising interest rates could eventually affect the overall Canadian economy if they go to high.
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Jobs Created By Homes Sales And Purchases
There are 120,550 jobs that are directly related to home sales in Canada. There are 82,200 jobs that are indirectly related to home sales in Canada
Source: Canadian Real Estate Report Buffini and Company |
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Clients constantly ask me how the rising interest rates will effect the sale of their home
They read the headlines and fear that buyers will not pay the new 'higher' rates,
My answer has been the same for the last number of years, compared to the 18 to almost 22% of the 80's what it costs to borrow now is nothing, it is almost like 'free money'. Buyers will still buy, a rate increase may slow the market down for a short time, but people still need to move for many different reasons.
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Kathy Clulow Sales Representative RE/MAX All-Stars Realty Inc.. Brokerage 905.852.6143
Each office independently owned and operated Not intended to solicit clients already under contract
Kathy, I believe that high interest rates are not good for any countries economic outlook right now. I know that some of the economists fear deflation make cause a further contraction of the economy. Which was what occurred during the Great Depression. Here, the big thing is we have to get people back to work. our rates are still very low, it is just that with the unemployment numbers at 10% it is difficult to sell homes. I do hope that rates stay down for now!
Tony and Darcy - there is no doubt that high employment levels and job security play a big part in maintaining a stable real estate market.
Kathy, It was interesting to read how many jobs are created by a transaction. I also loved reading about those horriffic rates of the early eighties. How quickly we forget! Now THAT was a tough market.
Marcia - even in that market homes were bought and sold ..... there is a saying (not sure that I have it right but the message is still there)
When the Going gets Tough
The Tough get Going
Make it a great weekend
Kathy: The sky is not falling and for buyers, it is a great time to buy as it is for sellers. The right perspective is all it takes.
Ty
Ty - It's a Fact ... Mortgages rates today are at or near the lowest they have been in over 40 years.
In the Last 40 Years Average residential Mortgage rates have only droped below 6% in the last 7 years ..... in 2003 through 2007 and then went above 6% again in 2008.
Source: Bank of Canada Download PDF
In 2009 and so far in 2010 Mortgage Rates have hovered consistently below 6%