Today we are going to discuss the trade-off between rising mortgage rates and falling home prices. We know a lot of you want to buy a home, and have dreams of home ownership, maybe a year down the line or maybe more than that. You are hoping home prices will fall so you can afford to buy a bigger place, so you get more value for your money.
We came across this Globe and Mail article where an analyst looked into this situation and he actually found out that in most scenarios you will end up coming out behind! The reason for this is that a higher mortgage rate would actually end up eating up all your savings. Per month your mortgage payments would still end up costing you more because of a higher interest rate and if you had to deal with that higher interest rate to begin with you would qualify for a smaller mortgage amount and a smaller purchase price, so you might not even be looking at the same properties that you are looking at right now.
This might be of concern to you, if you have time we encourage you to speak with your mortgage broker and your REALTOR® to see if your financial strategy is appropriate, and also if this plan is appropriate for the area you are looking in because you are counting on home prices falling, which may not happen.
If you have any questions for us please feel free to give me a call at 1-866-521-4536!