GUEST COLUMN
Isn't it nice to wake up on a Monday morning to find out the government wants to make radical changes to the mortgage rules?
Well, don't panic - the changes weren't that radical and, in the big picture, will not have a major impact on most homeowners and very little impact on real estate investors.
I want to focus on what I think will be the major impact that affects you. Here's what to expect over the next few months that you may not see in the headlines:
The new rules take effect in March 2011. The changes by Ottawa gave the Bank of Canada some breathing room so it did not have to raise interest rates immediately - but certainly did not suggest that would be the case the next time they meet, March 1.
Since everyone predicted that the Bank of Canada would not raise rates, the bond yields remained relatively unchanged and as such, there was no change in the long-term fixed rates.
Consumers will start to hear a lot of rhetoric over the upcoming months that rules will be changing and rates will be rising in March. Does anyone remember what happened last spring? The bond yields will start to react in anticipation of future rate hikes resulting in a short-term push on the long-term rates.
Bottom line: Look for an unusual spike in activity in February as the get-in-while-you-can mentality takes effect. Long-term interest rates will start to go up by early February, so your next move should be to get a rate hold - ASAP.
We are still sitting on five-year rates below 4% - but this may not last. If you are thinking of buying a home, secure your rates today ahead of the rush. This is the best way for you to protect yourself against future rate increases.
- column provided by Peter Kinch, president, Peter Kinch Mortgage Team, peterkinch.com
