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Baby, we got a bubble!?

I have a 5-year fixed rate of 2.89%. This was from a couple of years ago, and I thought I was quite fortunate to get that rate.

However, current 5-year fixed rates in 2015 are noticeably lower. People are commonly getting rates 20 basis points lower than mine.
 
Eug said:
I have a 5-year fixed rate of 2.89%. This was from a couple of years ago, and I thought I was quite fortunate to get that rate.

However, current 5-year fixed rates in 2015 are noticeably lower. People are commonly getting rates 20 basis points lower than mine.
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It's not that bad. I don't even think RBC or TD can do much better than that rate.
 
sentiant said:
Maybe the shine will come off of real estate as an investment for the masses. Right now condos are the most accessible entry point into this market for an investor. Condos MAY be hit, but only if the end user starts to get jittery and avoids entry price condos will the market come down. I believe most investors are in it longer term. It looks to me like the price appreciation of condos has not moved much since '09 & the flood of new product is keeping the price escalation at a minimum(matching inflation).
House prices on the other hand, they may not accelerate as they have been, but a correction? Not likely with the vast majority being end users. I heard it said most Canadians will forgo dinner to pay their mortgage.
So there you have it. My opinion!

Biggest problem may be i was not there for the housing correction of the early 90s. All I've seen is a rising market:)
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I think the only area that will really get hit is new construction...sort of like a few years ago when we had that little blip. Builders couldnt give away units.
 
TheKingEast said:
It's not that bad. I don't even think RBC or TD can do much better than that rate.
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I don't think my rate is a bad rate. It was an excellent rate for the time. And yes it's at a big bank. They offered me 3.29% on the phone. I said no, and asked what I wanted. I told them 2.89% and the very next day it was approved.

But the point is that rates are even lower now, and there is no indication that they will rise acutely in the near term. Obviously this will continue to help "affordability", if one can use that term with a straight face in this environment.

From a small lender, esp. if you have a broker buydown, you can get a 5-year fixed for 2.54%, or around 2.69% from a big bank. Thats just remarkable.
 
How micro condos are facing their first real test in Canada this year
http://business.financialpost.com/2...ng-their-first-real-test-in-canada-this-year/

There are nearly 3,000 micro condo units under construction in Toronto that are slated to be completed this year, Hildebrand says. If investors snatch them up, that could spur developers to build more of the micro units to satisfy demand from investors.

“This is something that the market and developers are going to be paying very close attention to in 2015,†Hildebrand said. “Sometimes we don’t know how strong demand is until we’re shown the supply.â€
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The challenge comes in securing a mortgage for the micro units. Brokers say Canada’s five biggest banks are hesitant to provide financing for units below a certain minimum square footage, concerned that investors will sell off the properties if the housing market starts to slide.

“If there’s a downturn in the housing market, is the lender going to be able to sell and recover the mortgage financing they provided?†said Christopher Molder of Axess Mortgage.

“Because these units under 500 square feet are relatively new, no one’s tested the market to see how desirable they are.â€
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It will be interesting to see how many end-users there are for these type of condos, particularly at the prices/rents they'll be asking. It's one thing to sell a microcondo to an investor based on a floorplan and some shiny renders but completely different to get an end-user to buy or rent it after touring the finished product.
 
Migos said:
How micro condos are facing their first real test in Canada this year
http://business.financialpost.com/2...ng-their-first-real-test-in-canada-this-year/





It will be interesting to see how many end-users there are for these type of condos, particularly at the prices/rents they'll be asking. It's one thing to sell a microcondo to an investor based on a floorplan and some shiny renders but completely different to get an end-user to buy or rent it after touring the finished product.
Click to expand...

Micro condos sell well in any bustling city like Toronto. Do I like them? No. But they are popular and in a city that is extremely expensive, micro condos will be sought after due to affordability IMO. As long as the location is good, you're good.
 
^ I agree. Although I'm not a big fan of micro condos, in Toronto, location trumps all else. If the location of the micro condo is prime, people will sacrifice some space for it. Many buyers/renters pay for location first then size/upgrades/style/type/etc. second. Albeit a very superficial thing to do, where else do people identify with the neighborhood you live in more so than in Toronto? :p
 
When you can get 2.65% for a 5-year from a major bank, and even less from a broker, then 3.84% for a 10-year isn't attractive at all IMO.

But then again, 10-year rates have never been attractive.
 
Mortgage rate war heats up as smaller lenders offer deep discounts

Only weeks after the country’s banks began offering eye-popping specials such as 2.84-per-cent five-year fixed mortgages, the average discounted five-year rate offered by the Big Six banks now sits around 2.79 per cent, driving the spread between the bank’s posted rates and the rates that customers actually pay to levels not seen since 2012.

But in a cutthroat move to grow their share of mortgage originations, many smaller lenders and brokers are offering deep discounts off the banks’ already low rates. Several online brokerages are offering variable mortgages with rates below 2 per cent and five-year fixed mortgages as low as 2.39 per cent.

Note that that 2.79% big bank rate is average, and as I mentioned earlier you can get big bank rates lower than that.

BTW, if you're really thinking of that 10 year rate, a much more attractive (although still not that attractive IMO) rate is the 7-year at 2.99%, if you're in BC:

Concerns are mounting that low mortgage rates will add fuel to an overheated housing market and add pressure to an economy struggling with rising household debt.Earlier this month, North Peace Savings and Credit Union, a small credit union in extreme northeastern B.C., began advertising a seven-year fixed mortgage at 2.99 per cent, well below comparable offerings from major lenders for the same mortgage term.

Perhaps you can put those rates to good use with a house like this one? ;)

Home of the Week: Time capsule home on a sprawling Toronto estate

28 VALLEYANNA DR., TORONTO
Asking price: $16.8-million
Taxes: $48,362.04 (2014)
Lot size: 9.39 acres <-- adjacent to Sunnybrook Park

The house at 28 Valleyanna Dr. has a singular perch in the city – sitting high atop a promontory that slopes down to the Don River Valley below. Over the span of a century or so, the setting has inspired three of Toronto’s most notable architects, with Eden Smith, Gordon Adamson and Raymond Moriyama each adding a layer to the historic estate.

BTW, here is a snippet of the ongoing saga of Vancouver's Olympic Village:

Seller takes big loss on Vancouver Olympic Village condo

The seller of this Olympic Village condo paid $1.565-million plus HST in 2010 – a loss of more than half a million dollars, according to selling agent Bryan Yan. “If they got in early, they got burnt,” he says.

He says prices dropped in 2013, when the city took over sales. At that time, he sold a 1,200-square-foot unit, with a water view, in the same building for $860,000. “That’s more like a Burnaby price,” Mr. Yan says.

Still horrendously expensive though, at ~$950 per square foot.
 
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So if there's another 0.25% BoC cut, we could be getting close to 2% flat on 5-year rates? Hard to imagine what the BoC thinks is going to happen other than a borrowing frenzy that will further deteriorate Canadians' balance sheets and increase the chance of economic disaster.
 
I'm not sure I'd be anticipating a 'borrowing frenzy' per se but rather those who were already in the process of borrowing will simply be able to borrow just a little more.
 
James said:
I'm not sure I'd be anticipating a 'borrowing frenzy' per se but rather those who were already in the process of borrowing will simply be able to borrow just a little more.
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Yes and no.

For new high-ratio buyers to take advantage of say record low variable rates or else fixed rates under 5 years, they actually have to qualify at the posted 5-year rate, which is currently 4.74%.

Those new buyers going with the 5-year fixed rates can take advantage of the decreased rates though.

Don't forget though that a large chunk of the market is for those renewing. This will help those who bought in 2010 or earlier to pay down their mortgages quicker.
 
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