3 Reasons Now Is the Perfect Time to Get a Toronto Mortgage
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If you’re looking to get a mortgage for a home or condo in Toronto, now would be a perfect time. That may sound a little counterintuitive given the COVID-19 pandemic and the economic headwinds our city is facing. However, these situations are temporary and have created the ideal conditions to lock in a Toronto mortgage. Here are three reasons you should consider getting a mortgage now.
Rates Are Low for a Toronto Mortgage!
Rates are the lowest they’ve ever been – literally. 2020 saw HSBC post a mortgage rate below 1%1 for their five-year variable rate product. Most industry experts believe that this is the lowest rate any bank has ever offered in Canada.
While the marketing gurus at HSBC designed the offer to make a splash, it indicates the overall interest rate structure right now. RateHub shows the average 5-year fixed mortgage as low as 1.39%2 and a 10-year fixed as low as 2.84%3.
To put these rates into context, consider that, according to the Bank of Canada4, historical rates have been much higher. Nearly 40 years ago, in 1981, the interest rate got as high as 21.46%!
So, if you’re looking to save some money on interest, now is the time to lock in a great rate!
The Winter Season Is Creating an Ideal Buying Opportunity
With winter and COVID-19, competition for Toronto area homes is not as high as it once was. The market is still doing well overall. However, if you’re looking to buy a home right now in the GTA or surrounding regions, you’ll find a lot less competition and fewer challenges getting your offer accepted.
In other words, not only will you save money on your interest rate, but you’ll also find it easier to get your offer accepted on the home or condo of your dreams.
Qualifying for a Toronto Mortgage Is Easier Now
The federal government implemented rules in 20185 to ensure Canadians can afford mortgage rate increases. All banks needed to ensure that applicants could afford the actual mortgage interest rate plus 2%, or the current Bank of Canada 5-year benchmark rate.
With interest rates this low, most banks are using the Bank of Canada 5-year rate. As of right now, this rate sits at 4.79%6, and while that might be a full 3.8% above the 0.99% offer that HSBC has, it’s still the lowest interest rate since these rules went into place.
Therefore, qualifying for one of these mortgages is easier now than almost any time since 2018.
If You’re Looking To Buy, Now’s the Time!
With relaxed qualification rules, record-low interest rates, and a less competitive market than years prior, this winter is shaping up to be one of the best times to get a Toronto mortgage. Whether you’re looking at buying a condo or you want a single-family home, now is the time to see what’s available and lock in a rate that can save you money!
If you’re interested in making a move, please contact me! I would love to understand more about your circumstances and help you find the perfect home in this beautiful city.
Sources
1 Pete Evans CBC News (2020, December 06) Mortgage rates hit a new low, with Canadian bank posting below 1%. Retrieved December 18, 2020, from https://www.cbc.ca/news/business/mortages-covid-hsbc-1.5828934
2 ratehub.ca (2020, December 18) 5-Year Fixed Mortgage Rates. Retrieved December 18, 2020, from https://www.ratehub.ca/best-mortgage-rates/5-year/fixed
3 ratehub.ca (2020, December 18) 10-Year Fixed Mortgage Rates. Retrieved December 18, 2020, from https://www.ratehub.ca/best-mortgage-rates/10-year/fixed
4 Bank of Canada (Date Unknown) AVERAGE RESIDENTIAL MORTGAGE LENDING RATE ‐ 5 YEAR. Retrieved December 18, 2020, from https://www.bankofcanada.ca/wp-content/uploads/2010/09/selected_historical_v122497.pdf
5 Lisa Rennie (Date Unknown) The Canadian Mortgage Stress Test in 2021. Retrieved December 18, 2020, from https://loanscanada.ca/mortgage/the-canadian-mortgage-stress-test/
6 Bank of Canada (2020, December 18) Daily Digest. Retrieved December 18, 2020, from https://www.bankofcanada.ca/rates/daily-digest/