Low Interest Rates Continue to Spur Vancouver Real Estate through 2011.

Dollar in front of house

In the spring and summer of 2009 many buyers in Vancouver that were on the fence jumped off and ran to their closest mortgage broker or bank, afraid that interest rates were going to shoot up. Since then we have seen a minor shift up in rates. However, with the US credit crisis and talk of a double dip recession, plus the global economic challenges, governments and banks are talking about holding rates even. In some cases there is even talk of taking them down again! In a recent article by Mary Gazze titled Canadian homebuyers undeterred by global economic turmoil, CIBC deputy chief economist Benjamin Tal was quoted as saying:

“The uncertainty globally is really benefiting mortgage holders because it’s really postponing the increase in interest rates in Canada,” he said. Mr. Tal explained: “When the stock market turns volatile, real estate becomes an attractive investment because of its security….Many people can use this opportunity to look into extremely low mortgage rates, so again the misery of other people elsewhere is helping Canadian home buyers.”

Canadian Real Estate Association (CREA) revised its forecast for national home resales up for the rest of the year. In fact, Gary Morse, CREA’s president stated, “While there had been some talk of potential interest rate increases, that hasn’t happened…In fact, mortgage interest rates have actually come down, and are now expected to remain low for the remainder of this year and into 2012. It’s a great opportunity to purchase a property, with financing at very favourable rates.”

For Vancouver real estate, that means business as usual, for now. In fact, as indicated in my recent blog Greater Vancouver August Real Estate Market Update, you will find that the market has experienced a rather normal summer.

It is likely that attractively low interest rates will continue to bring buyers to the Vancouver real estate market, keeping it fairly well-balanced for the next year. When and if rates move up, the market will undoubtedly cool; buyers inevitably get less for their money at higher rates of borrowing. As we see it now, expect  stable interest rates and a stable Vancouver real estate market for the rest of 2011 into 2012.

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