Vancouver Mortgage Rates Come Down As Real Estate Heats Up

Word on the street is that the prime rate will remain steady through 2010. Fixed mortgage rates will change with the bond market but the variable mortgage rates which are tied to the Prime Rate offered by a bank and more affected by the Bank of Canada's rate will likely remain unchanged. Many Vancouver Realtors and Lenders I speak with are recommending that clients go with the variable rate for now. The savings can equal hundreds of dollars per month and those with variable rates usually have the option to lock in a fixed rate at any time at no charge. The inverse is not true. A fixed rate borrower cannot switch to a variable rate without paying significant penalties.

And how does this affect your purchase decision? Right now we are experiencing historically low mortgage rates in Vancouver for fixed and variable rates. Combined with lower prices compared to last year we have, for the first time in quite some time, the ability to purchase cash flow positive properties within the Vancouver, BC, city limits. First time buyers are excited again. Investors are competing. And move-up seller/buyers are finding it more affordable than ever to get their dream home.

It is a great time to be buying or selling real estate in Vancouver with an active market that is realizing affordability levels not seen in almost five years. With mortgage rates predicted to remain steady and an active marketplace seeing sales to listings ratios over 50% now is definitely the time to be looking to make your move.

Over the next five years, however, is a whole other question and this is where caution must be injected. While the ability to borrow large sums of money has never been cheaper, now is definitely not the time to overextend yourself. Vancouver Realtors and Mortgage Brokers are cautioning buyers that the rates they receive today will likely be a lot higher when they go to renew their mortgage in five years. Today should be looked at as an opportunity to pay down large sums of principle by making bonus payments and going on accelerated biweekly payment plans (26 payments per year actually can reduce your amortization by almost 6 years).

Author Will Wertheim is a Vancouver based realtor. You can visit his blog at agentwill.com.