Vancouver-On The Hook
Posted October 13th, 2009 in Mortgage Rates, Real Estate
In A Wink
Today the Scotia Bank, CIBC and BMO raised their interest rates by up to 0.35 of a percentage point on fixed rate mortgages.
Light Line Big Rod
No it’s not much in the big scheme of things but, it’s the start down the road to discomfort for some recent Vancouver home buyers. Under the false assumption that nobody pays personal income tax, a lot of them might be studying their pay stubs to see if there is a 0.35 per cent raise in their income to offset this interest jump. Wasn’t it just a few days ago that the banks reduced the variable rates? Some might wonder if this is the beginning of the return to previous interest rate levels. What will the impact be for those who maxed out their Vancouver home purchase at 2.75% as they look forward to their mortgage renewal date? Will their dream home be gone in a wink?
Cast or Troll
Viewing variable rates as the wriggler on the hook, one can’t help but imagine that banks, those bastions of patient jigging, wait with boots on ready to reel in the cash in a few years. It would never be acknowledged, but you wonder – do banks view people’s lives as sport or is it just business? Either way, today’s home buyers with large mortgages will be on the hook – for many a hook that is 35 years long.
The mortgage people I’m speaking with say “most home buyers are going all in at these historically low interest rates.” There had better be some good income growth over the next few years or there will be some people hurting come renewal time.
Jigga!
Norm,
As a voice of reason rooted in conservative prairie stock with liberal leanings there are those amongst us who should consider your words considered admonishment.
Franka,
Noun or Adjective ??? Care to expand on that thought?
Norm (and Frank)
As a prospective buyer, whos been dubtifully sitting on the sidelines forever, trying to sort out the timing and level of correction that may seen in Vancouver Westside, do either of you know where stats could be availalbe to support the anecdotal info above on mortgages, say in the last 2-3 years?
Nor harm wished on others, but it seems the speed and depth of any price correction could depend quite heavily on what % and when owners begin to feel the financial squeeze from higher rates.
John
Check BOC for some month to month numbers. I see a few graphs around but they are not very pretty. BOC has some line graphs.