Would you like to buy that home for 35% less?
If you follow the real estate market in BC, you know that home values have dipped over the last year and a half. Many homes have dropped in value around 15% from their peaks. There are a variety of reasons for this, but the introduction of the “mortgage stress test” by the federal government, in conjunction with the various BC government Taxes on Foreign Buyers, Speculators, and Empty Homes, has all reduced buyer’s ability & desire to purchase homes.
The great news for perspective home buyers, is that this perfect storm of regulations & taxes has actually created a fantastic time for home buyers to take advantage.
Yes, home prices have obviously dropped. Therefore, making it “cheaper”. However, the 5 year fixed mortgage rate has also dropped significantly. The typical interest rate is 1% lower than it was last year. In conjunction, those 2 factors make home ownership significantly cheaper.
Look at the example below, based on a home buyer with a $100,000 down payment. Let’s compare them buying a house early last year, compared to buying that exact same house today:
Early 2018:
House Price $800,000
Mortgage Rate: 3.74%
Mortgage Payment: $3,695
Today:
House Price $680,000
Mortgage Rate: 2.74%
Mortgage Payment: $2,733
The home is $120,000 cheaper, and their mortgage payment, is now $962 less per month. From a monthly payment perspective, their mortgage payment is now 35% less than it would have been last year. That’s a savings of almost $58,000 in mortgage payments over their first 5 years of home ownership.
Homes are now truly “on sale”. How does 35% off sound?
Lower home prices, and significantly lower interest rates, make it one of the best times to purchase a home in quite some time.
Contributed by:
Doug Neufeld, BBA, AMP
Senior Mortgage Planner
Dominion Lending Centres – Mortgage Negotiators
Email: doug@mortgagenegotiators.com
Cell: 604.807.0720
Fax:604.539.8228
www.dougneufeld.com
