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Thinking about buying a home but nervous about the real estate market?

 

Here is a like for like comparison to shopping for a home in 2007 when the market was robust and it was a great time for buyers:

 

October 2007 Median Price: $495,000

5 year rate (2007): 5.75%

Amortization: (2007) 35 years

Monthly Payment: $2717.64 (25 year term would have a monthly payment of $3093.86!)

Remaining balance after initial 5 year term: 469,139.48 NOTE: remaining balance at a 25 year amortization would be $443,103.80

VS.

October 2012 Median Price: $526,500

5 year rate: 2.99%

Amortization (new rules): 25 years

Monthly Payment: $2488.94

Remaining balance after initial 5 year term: $449,937.10

Not only is the monthly cash flow BETTER buying today with lower rates and under the new rules of a shorter amortization, but you get to pay down an additional $19,202.32 in principal reduction on the mortgage. All this after purchasing today at a HIGHER Median Price point!


TSX -118.41 to 11,811.38   
DOW -28.57  to 12,542.38
Dollar +0.27 to 99.91
Oil -0.03 to 85.42
Gold -4.80 to 1,709.00
*these numbers have been taken from  www.tmxmoney.com  at 8:00AM EST
 
Canadian 5 yr bond yields markets -0.01400 to 1.30000  The spread (based on the 5 yr published rate of 3.29%) is within the comfort zone at 1.99% http://www.bloomberg.com/quote/GCAN5YR:IND  The rate of return on your bond, can be read through a yield curve, If the increase in bond yield continues to go up, the spread will continue to shrink and this could be a trigger for interest rates to rise.  The comfort zone is between 1.90 and 2.10

Thanks to Callum Greig    
Franchise Owner    
DLC - Prime Mortgage Works Inc.

 

NOTE: MLS® property information is provided under copyright© by the Victoria Real Estate Board. The information is from sources deemed reliable, but should not be relied upon without independent verification. This website may only be used by consumers for the purpose of locating and purchasing real estate.