If you are looking to buy a property, the good news is that there are still worthwhile mortgage deals available, despite the Federal Government’s recent moves to tighten regulations over home loans. In fact, the changes have helped to boost the property market, with price rises over the whole of 2013 looking set to top previous forecasts. Summer saw the real estate market in Toronto surpassing expectations, and, by the end of the year, the Canadian Real Estate Association has forecast that the average home price will rise nationally by 3.6%.
Sales in British Columbia are predicted to take off next year, and the C.R.E.A. predicts that price rises in the region during 2014 could be as high as 6.7%, even though the rate of increase looks set to slow nationally. All this is by contrast to the US, where the market has continued to struggle, although there are now some hopeful signs. However, the UK is following in Canada’s wake, with house prices recovering and a rise in mortgage borrowing.
Rates on Hold
The Bank of Canada has signaled that it does not intend to raise rates in the near future. This means variable rates, which are in some cases as low as 2.4%, may now be more appealing, because there is less risk of them shooting upwards. Meanwhile, for those who prefer the certainty of a five-year fix, it is possible to get a deal around the 3.89% mark. Determined actions have recently been taken to avoid the market overheating, and Ottawa has made major changes to the regulations, with new guidelines decreeing that buyers must now have a deposit of at least 5%, or 20% for buy-to-let loans. There are also stricter rules about the amount that can be borrowed when refinancing, and the maximum length of loans has been reduced from 40 to 25 years. Despite all this, mortgage lending is still rising and Canadians are now estimated to owe more than $870 billion in home loans to the chartered banks, a rise of around $60 billion since the start of 2012.
Inspiring Other Economies
As Canada’s economy gathers strength, it is providing an inspiration to other countries, including the UK, where trade leaders are currently involved in a drive to win Canadian investment. The British market is also following Canada in terms of growth in the housing market, with things starting to heat up there too. Recent figures from the UK’s Office for National Statistics showed that the British economy is now growing at the greatest speed since mid-2010, with an annual growth rate of just over 3.3%. However, the housing market is growing faster still, with prices soaring in the south-east and London in particular. With interest rates at an historic low, there are attractive mortgage rates available, and according to money.co.uk, the best current market rate is 1.49% for a two-year fix. Like their Canadian counterparts, the UK Government may come under pressure to take the heat off the housing market and prevent a bubble developing. However, in the meantime, there are mortgage bargains to be had.
In the US, the housing market has been struggling by comparison, but there are now signs that it is starting to follow Canada upwards. Despite a rise in mortgage rates, and problems caused by the recent shutdown, the market is currently gaining strength, and new figures from the National Association of Realtors showed that prices rose in nearly 90% of US cities during the third quarter of 2013. There are even fears of a price bubble in some areas of California, with prices having risen by more than 40% in just a year in Sacramento. However, in some other states, such as Illinois, prices are still falling, and nationally they are still well below the figures reached back in 2007.
As the world fights its way out of the downturn, there are nerves about what the future holds for the housing market, but the current signs are looking good, in Canada in particular, where it seems as if prices will continue to rise in 2014, but at a sustainable level, with no overheating. The hope is that the same will be true for the UK and the US over the year ahead.
No comments:
Post a Comment