Talk to a BMO Bank of Montreal banker about considering a bigger downpayment and reducing the amortization on your mortgage to save money
The housing market in Canada has seen existing Canadian home sales surge 76 per cent from their January lows. Not only that, in November, existing home prices spiked 19 per cent above year-ago levels, the second fastest clip in two decades. With record low interest rates, more people than ever are looking to purchase a home. However, BMO experts are predicting that interest rates will rise in 2010.
“We expect the Bank of Canada’s overnight rate target to climb from 0.25 per cent beginning in July 2010, to 4.25 per cent in mid-2012. In turn, consumers can also expect mortgage rates to increase,” said Sal Guatieri, Senior Economist, BMO Capital Markets. “While today’s ultra-low borrowing costs represent a unique opportunity to purchase a property, home buyers need to proceed with caution and keep in mind that renewal rates will likely be substantially higher in coming years.”
“Stretching the limits of your budget by choosing the maximum amortization period and a minimum downpayment leaves you little wiggle room to deal with an unexpected financial challenge,” said Jane Yuen, Senior Manager, Mortgages, BMO Bank of Montreal. “A meaningful down payment and shortening your amortization by making extra payments on your mortgage will save you tens of thousands of dollars in interest costs.”
http://www.newswire.ca/en/releases/archive/December2009/22/c5258.html
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