The prime lending rate is the lowest it’s been in five years—take advantage of it.
It may be a seller’s market right now, but the low prime lending rate means now is a great time for buyers, too. Here’s why it may be time for you to take the leap.
The prime rate has dropped.
The Bank of Canada prime rate is the lowest it’s been in years. That means good things for buyers. “In layman’s terms, banks charge you a percentage over the term of your mortgage and that’s how they make their money,” explains realtor Kristy Masaro. “But right now, it’s cheap to borrow money, so more people can afford it.”
First-time homebuyers have an advantage
Masaro explains the low rate is especially beneficial for first-time buyers as a lot of then couldn’t afford to get into the market otherwise. Though the condo market is becoming oversaturated, single-family homes are always a good investment. “Any time you have a single-family home, you’re almost always looking at a benefit in the future,” she advises.
A seller’s market means plenty of options
"Though the phrase 'seller’s market' may scare off buyers, it’s always good to get into the market,” says Masaro. “There’s not a right or wrong time.” And with so many people getting the selling bug, you’re bound to see a flood of listings of great properties coming in soon as the market balances itself out. But don’t get pre-approved for your mortgage before you’re ready to buy, warns Masaro. “A lot of people don’t realize that getting pre-approved too often can hurt your credit.”
A timely renewal could save you big money
Already have a mortgage? Now is a prime time to renew. “If you renew your mortgage now and get a lower rate, you can pay it off at a higher rate and apply more money towards your principal,” explains Masaro. It may be a good time to do an upgrade as well, she suggests. “So many single-family homes are going into multiple offer situations. You can get more, and put that money on another mortgage, and it’ll go further.”
Lenders are competing for your attention
“This competition gives banks a time shine,” says Masaro. “You see the strong providers come out to play and the weaker ones get demolished.” Make sure you understand what your mortgage provider should be doing for you, though—it’s not just about approving your loan. “A good mortgage provider will ask you about future plans: Are you having children? What if one of you gets sick? They should be asking you about your lifestyle and goals to preserve your mortgage.”