What are Mortgage Rates Going to Do in 2015

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People wanting to get into the Canadian housing market in 2015 likely have lots of questions on their minds. Experts have come to a unanimous agreement that home prices will fall because of the global economy recovery. With a stable employment rate, increased exports, and oil prices that are relatively acceptable, economists foresee higher bond and mortgage rates and a cooling of the housing market throughout the country for the next few years.

Robert Hogue, a senior economist with RBC bank believes that the market will have a soft landing in 2016 with home prices rising with an increase of 1% or 1.5%. This is as a result of buyers rushing to get a piece of the market before rates increase, with prices decreasing later in the year.

According to Hogue and many other economists, the present natural rate of 5% has actually dropped thanks to the activities of the baby boomers. The labour market in Canada is expected to deplete which would lead to a reduction in the growth of productivity, limiting the economy and suppressing the inflation potential.

Demographics are also estimated to have an impact, especially when the number of new immigrants in Canada is considered. 70% of the population growth in Canada is attributed to new immigrants, half of whom are between 25 and 44 years of age. This would result in an increase in the demand for new homes and home buying, offsetting the slowing economy created by the baby boomer generation.

It is advised that home buyers prepare for the possible worst. For persons who are buoyant enough to afford the prices, it is best to make the purchase now, as waiting for a fall in the prices might not be the best idea. Home buyers should focus on whether or not they can afford the monthly mortgage payments even when increased to 5%.

You also need to make a decision on whether or not you can cope with a drop in the prices of homes, especially as experts predict a 10% drop or even as much as 30% in some areas in Canada.

You should remember that your home should be a place where you find solace. You need to be careful in whatever housing decision you want to make in 2015.

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