Nov. 11, 2015
Here is a question from a reader with an answer, concerning Rising Rates and the Bubble !
We recently received a question from someone who was actively looking to buy a home in the Ottawa South area and was worried about "The Bubble" and rising mortgage rates.
The actual question was:
"I am buying a home and read your blog. Very nice and great information. I am not sure about this bubble situation here in Ottawa, and I am starting to worry. Mortgage Rates are also climbing all of a sudden and I have no idea why... Can you explain, or do you have any information ? "
Patrick Walchuk replied to this teaser, reply is below:
Thanks for the feedback.
While I don't pretend to be an economist......my understanding is that the USA will be raising interest rates as inflation increases.
They are finally ending seven years of stimulus spending. Higher rates will make the dollar more attractive as it rises.
This will have a negative impact on USA exports (goods will cost more) Canada will basically follow suit probably in mid December from what I read, so look for our historically low mortgage/interest rates to slowly start climbing.
We are not really in any sort of a bubble in Ottawa. Recent (and previous) CMHC report have singled out Toronto and Vancouver. Of course Calgary and Edmonton felt a hit a while ago when oil prices fell. That is the nature of their economy.
In Ottawa the single biggest employer is the feds. We are stable. Developers overbuilt condos in central Ottawa and there is an 8 month supply of new condos on the market. This is down from a 12 month supply last summer.
Personally I can't say I care for the condo market, many of the older resale buildings are going through special assessments (the owners have to pay big $$ to make big repairs)
So if you are looking for a new condo or better yet a residential home in Riverside South or Barrhaven, I really believe you will be fine and will benefit from our current low rates. Just get yourself pre-approved for a mortgage and get locked in to a low rate.
If you already have an agent, great. If not and you need assistance let me know.