The one-year fixed mortgage rate is forecasted to finish 2010 at around 3.2 per cent and reach 4.05 per cent by the end of 2011, according to the British Columbia Real Estate Association (BCREA). The association cites the Bank of Canada’s fiscal tightening and brighter economic prospects as the driving reasons.
However, Joe Santos, MCAP
regional vice-president of western Canada, sees it differently. “Currently, the one-year fixed rate is 2.9, so for it to go to 4.05 by the end of next year, that’s an increase of about 115 basis points, which is fairly substantial,” said Santos. “I would be surprised if it increased by that much because of the continued economic uncertainty in Europe and the U.S. economy hasn’t really picked up either. Employment is still an issue down there.”
Santos says rates are anticipated to increase in 2011 but a jump from 3.2 to 4.05 per cent is a long shot.
In any case, the average interest rate is still historically low. This would be a good time to purchase a new home as BCREA also predicted that real estate in the western province is now shifting to a buyer’s market. “A relatively large number of homes for sale have created the most favourable supply conditions for home buyers in more than a year,” said Cameron Muir, BCREA chief economist.
Santos agrees. “This year and early next year would be the time to get out there and purchase houses especially if you’re going to be in it for the long term,” he said. “The risk is pretty minimal if you’re there for 10 years or more.”
- Heather Li, CMP Staff Writer