When it comes to buying a home, now is not the time for short-term thinking. Now is the time to consider the value of cash in your pocket now versus the long-term trajectory of interest rates and the economy.
The 10-year fixed interest mortgage rate in Canada has never been this low.
A home is meant to provide comfort, safety, security, and ultimately hold or even increase its value. And that’s why a 10- year interest rate makes sense. For a lot of Calgarians who are thinking about buying a home, this is a fantastic time to buy.
That doesn’t mean everyone should buy a home. For example, if a few hundred dollars either way on your monthly mortgage payment is your primary focus when buying, then perhaps owning a home right now is not for you. Likewise, if that same few hundred dollars is the difference between making it or missing it on a month, then you may already be excessively leveraged, which is a dangerous position when rates inevitably increase and terms come up for renewal.
Let’s imagine for a moment that you’ve always wanted to buy a Toyota and they have never been cheaper than right now. You can afford it, so why not buy it? If you think short-term only, you may be attracted to a cheaper car that offers a lower payment. However, that car also won’t last as long as a more expensive but better-made vehicle and will likely have a lower resale value in the future. If things go really badly, you may even have to replace that “cheaper” car even before you’re done paying for it. Which was the better choice in the long term?
Real estate is different because it’s an investment whereas a car is not. Cars only depreciate, while the overwhelming trend with real estate is appreciation.
Actions Speak Louder Than Words
Whenever a banker, broker, or someone else says, “you should do this,” in real estate, it’s a good idea to look to see if they’re doing the same thing. Are they taking their own advice? Are they buying the same products, services, and assets in the same way as they advise you?
Dennis not only leads Plintz Real Estate, but also owns a small portfolio of rental properties and is currently refinancing all of his mortgages and locking them in for 10 years. This is the advice he is both giving and living.
Consider a 10-year interest rate. Talk to your lender, ask about projected rates over the next 10 years, do the math, and decide if a 10-year rate is right for you.