Oct 2012 Rate Update

RATES
No material update. The low rate environment will continue as the economic picture remains bleak.  Fixed rates, in general, are still better than variable rates depending on your mortgage & property goals. IMPORTANT! One thing, however, that is a recurring issue when people are mortgage shopping is that people become too rate focussed. Rates are very important, but recently we’ve seen some customers get so caught up that they’ll take a rate a lender offers for 5 basis points less without reading the fine print….RESTRICTED. It’s important to understand the terms of your mortgage, which go beyond just the rate so you don’t get stuck with an inferior product.
REAL ESTATE PRICES DROP
Slowed economic growth combined with the recent mortgage rule changes have put downward pressure on real estate prices. The market has slowed considerably and once price support is achieved, it will likely stagnate for the foreseeable future. Listings have increased, while sales have slowed because buyers have exited the market either voluntarily or because the rule changes made it harder to qualify. Bottom line –  less houses are being absorbed.  A problem that we’re seeing is that many sellers are still looking for prices that are no longer realistic. Recent stats have shown a large decline in sales and relatively small drop in prices because of this.  Prices tend to lag, but will adjust in order for the market to regain balance.  Therefore, if you want to sell, price it right. Continual price redutions don’t have any positive effect on the market. If anything, they create more downward pressure on prices because of buyer perception.
Talk soon,
Gord, Steve and Jeff

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