Are You Waiting For Rates To Drop?

It has been noted that most aspiring Canadian homebuyers are delaying their purchasing timeline. If you’re someone who has been paying attention to rates, you’ll know that the Bank of Canada has been toying with the idea of lowering rates for several months now. Which is a direct link to why homebuyers are pushing out their purchasing plans. 

The reason I bring this topic up yet again, is because I want to reiterate that you will see savings if you act off affordability and do not get stuck on the rate percentage. Let’s see an example!

Note: Purchase prices and interest rates are for ease of demonstration, and may not accurately reflect the market.

In both scenarios I used a 20% down payment for a 5 year term and an amortization of 25 years. 

Scenario 1: A $1,000,000 home with a 5% interest rate results in a monthly payment of around $4,652.84.

Scenario 2: Now, imagine a $1,200,000 home, but with a slightly lower interest rate of 4.5%. Surprisingly, the monthly payment jumps to approximately $5,313.34.

Even with a lower interest rate, the higher purchase price can significantly impact your monthly budget. This is what is expected to happen once those rates do finally drop.

Let’s start with a conversation, and run your personalized scenarios to ensure affordability.