Kamloops Mortgage Info: Understanding the Trends Behind Mortgage Rates

Mortgage Information

Brenda Colman - Invis Kamloops Mortgage BrokerThe Bank of Canada is expected by many economists to raise short-term interest rates in June or July, prompting many Kamloops home buyers and mortgage holders to ask whether a variable-rate mortgage or a fixed-rate mortgage is best for them.

How, exactly, are mortgage rates offered by lenders determined?  Many Canadian mortgage holders are surprised to learn that the pricing for variable-rate and fixed-rate mortgages are determined by two different means.

First, let’s look at the pricing of variable-rate or “floating rate” mortgages.  The rate for these mortgages is tied directly to the Prime rate, which is set by the Bank of Canada, usually through regularly scheduled announcements.  A competitive variable rate mortgage is now commonly available at Prime (now at 2.50%) minus 0.60%, or even lower in some cases.  Those with variable rate mortgages need to keep an eye on the Prime rate and should keep in contact with a mortgage professional, who can explain interest rate trends.

Pricing for fixed rate mortgages follows a separate dynamic, and is a bit more complex.  Fixed-rate mortgages are priced in relation to the bond markets, as bonds are the main competing investment to mortgages for investors.  Mortgages are priced higher than bonds, usually between about 1.20% and 1.90%, to account for higher risk of default and administration costs incurred by investors who hold mortgages as opposed to relatively hassle-free bonds.

The most popular type of mortgage in Canada is currently the five year fixed-rate mortgage.  Discounted rates for this type of mortgage (available through a mortgage broker) have been trending upwards in recent weeks and currently stand at about 4.29%.

With rates for both variable and fixed mortgages relatively low, consumers must decide based on their own preferences and unique circumstances. A mortgage broker can help consumers evaluate their mortgage options and make an optimal choice.

Brenda Colman, Mortgage Consultant, Invis Kamloops
P. 250-318-8118  E. [email protected] W. www.BrendaColman.ca

B.C. Real Estate Association’s Second Quarter Housing Forecast for 2010

B.C. Real Estate News

The B.C. Real Estate Association has released it’s Quarterly Housing Forecast for 2010. Included in this report is the Housing Forecast Summary, where all the real estate board areas are shown individually. (link removed) to view the full report with the charts. Information from the report is included below.

Residential units sales through the Multiple Listing Service® (MLS®) in BC are forecast to ease back 3 per cent to 82,350 units in 2010, before climbing 4 per cent to 85,900 units in 2011. Waning pent-up demand, upward pressure on mortgage interest rates and tighter lending qualifications for low equity home buyers will moderate consumer demand this year, particularly on the South Coast.

Improving economic conditions, however, are expected to counterbalance some of the erosion in affordability caused by higher mortgage interest rates and tighter lending.

Stronger economic and employment growth in 2011 will bolster housing demand and push home sales higher. Regionally, home sales are forecast to edge lower in Vancouver, Victoria and the Fraser Valley as the dramatic rebound in consumer demand experienced during the latter half 2009 was induced by short-term factors of pent-up demand and favourable interest rates.

The North is expected to post the strongest percentage gains in unit sales as a result of reinvigorated demand for commodities and the associated employment growth. The rest of the province is expected to continue along a trajectory of gradually improving consumer demand in line with overall provincial economic performance.

After climbing 2.4 per cent in 2009, the average MLS® residential price in the province is forecast to increase a further 6.2 per cent this year before remaining relatively unchanged in 2011, albeit up 1 per cent. Vancouver, Victoria and the Fraser Valley comprise two-thirds of provincial home sales and the 2009 year-over-year change in BC home prices largely reflect gains already realized in those markets.

Seller’s market conditions have now given way to balanced conditions in the Lower Mainland and Victoria as moderating consumer demand and a larger inventory of homes for sale are quelling upward pressure on home prices.

Kamloops and District Real Estate Associations Statistics For May 2010

Kamloops Real Estate Statistics

The Kamloops and Area Real Estate Association has posted their statistics for May 2010. Residential sales are up and so are the number of listings over last year. The total number of sales for up to this point in 2010, is much higher than than this point last year. Click on the image to enlarge.

Kamloops Real Estate Comparative Analysis by Property Type May 2010

Kamloops Real Estate MLS Activity May 2010

Kamloops Real Estate Sales by Subarea May 2010

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