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February 2006

Market commentary & Interest rate trends

The Bank of Canada (BOC) increased the overnight rate by 1/4% to 3.5% on Jan 24, 2006, prompting banks to increase the prime rate to 5.25%.  Interest rates on the  3 yr, 5 yrand 10 year term mortgages have risen but not by much.  Recent trends in the bond market indicate that fixed rates will be moving up in the short term.

There is a strong expectation of another rate increase in March 2006.  CIBC is predicting an increase in the prime to 5.5% in 2006 before dropping down to 5.0% in 2007.

With interest rates leveling off, this is probably a good time to reconsider a variable rate mortgage (unless you have already locked-in a good fixed rate mortgage).  If you can afford the risk, you may want to consider a variable rate strategy.

Rates and Charts

Prime @ 5.25% (next review on Mar 7, 2006)

Term	Dec 16	Dec 23	Dec 30	Jan 6	Jan 13	Jan 20	Jan 27
3 year	4.75%	4.90%	4.90%	4.90%	4.90%	4.90%	4.90%
5 year	4.94%	4.99%	4.99%	4.99%	4.99%	4.99%	4.99%
10 year	5.34%	5.34%	5.34%	5.34%	5.33%	5.33%	5.33%

Table shows the discounted residential mortgage rates for 3, 5 and 10 yr closed fixed rate mortgages

For a longer term view, click here to see the 3, 5 & 10 year best residential rate since September 2003 (updated monthly)

Click to view other relevant graphs

 

1) Graph of 5 year residential mortgage rate and prime rate since 1951

2) Graph of 5 year posted rate since January 2000

3) Graph comparing the 5 year mortgage rate versus variable at prime - 0.80%

Special Offers:

1. 5 yr fixed rate @ 4.8% - mortgage closing before April 19, 2006 for Lower Mainland and selected parts of British Columbia*
2. 5 yr variable rate at Prime less 0.9% - must close by March 3, 2006*

Your home purchase strategy

1. The list price is only the beginning. Most markets across Canada are experiencing multiple offers and aggressive bids. Be prepared to sweeten your offer by not only giving the seller the full asking price, but by being prepared to offer a whole lot more! 
2. When there are no other offers, a buyer can negotiate the price that is acceptable to both parties. Placing your very first offer, one that the seller cannot refuse, could give you a winning offer immediately. 
3. Include a copy of the letter of commitment from the lending institution to show that you are a ready, willing and able buyer. 
4. The early bird gets the worm! Be sure to go to first viewings, and agent’s opens whenever possible. 
5. Good properties in good locations just don’t last—so in any type of market, place an offer FAST! 
6. Be prepared to place your trust in your spouse. If you can decide on placing an offer, even if your spouse or partner has not had a chance to view it, this may be your winning strategy! 
7. There are still “bargains” out there, if you can see a property’s potential and can overlook clutter or unstaged properties. You may still get a good price! 
8. In any market, remember to hire a professional home inspector as your realtor, or you can’t see everything! 
9. First time home buyers have a tough time making that first purchase. Having your realtor on board with you will ensure that your interests are being protected at all times! 
10. What is YOUR strategy? Find out beforehand what your strategy is before buying. Make sure that your agent has the experience in multiple offer situations to win you that property of your dreams.