75 curlew urban towns . Canada will enter a period of raising interest rates. The choice of floating or fixed mortgage depends on the ability to take risks. The US Federal Reserve has raised interest rates, the Bank of England has raised interest rates for the second time in a decade, and the Bank of Canada is expected to raise interest rates gradually from October.Please Visit: 75 curlew urban towns to Get Your VVIP Registration Today!
According to the housing trading website Zoocasa, interest rate hikes affect home loans, but floating interest rates and fixed interest rates have their own advantages and disadvantages, depending on the buyer’s ability to withstand future risks.
According to Penelope Graham, executive editor of Zoocasa, inflation in Canada in august exceeded 3% for the first time since 2011; gross domestic product (GDP) has also improved; and the real estate market has adapted to new lending rules and is beginning to shake off a year of volatility. As a result, the central bank is expected to raise interest rates by two-thirds when it announces the prime rate on October 24th.
The fixed interest rate is basically locked up for five years, while the floating rate changes with the prime rate. She says floating rates have been very popular over the past decade because of falling interest rates. The Canadian central bank has raised interest rates by 1% from mid-2017 to the present, and the trend of raising interest rates will continue. Graham also pointed out that even if interest rates continue to rise next year, floating interest rates are still the best choice for home buyers.
Based on the current fixed and floating interest rates of 3.14% and 2.44% respectively, and a loan of 500000 yuan, the fixed interest rate is 2402 yuan per month, with a total interest payment of 72654 yuan over five years.
The monthly payment at the floating rate is 2225 yuan and the five-year interest is 56172 yuan. If the interest rate remains unchanged during the period, the floating interest rate can save more than 10000 yuan in contributions and more than 16000 yuan in interest. If the interest rate rises by 0.25% a year, the floating rate will begin to be higher than the fixed rate in the fourth year, but due to more savings in the first three years, the five-year interest rate is 67808 yuan.
It is still at least 4846 yuan less than the fixed interest rate. If the interest rate is raised by 0.5% a year, the fixed rate will be better than the floating rate.
Canada’s prime rate rose to more than 20% in a short period of time in the 1980s. She pointed out that it is believed that this kind of situation is not easy and will happen again, but it is not impossible. Floating interest rates have always been the better choice, but the stability provided by fixed interest rates is more popular with consumers.
Floating interest rate and fixed interest rate have always been difficult for many home buyers to choose. Although the prime rate of the Central Bank of Canada has not changed this month, the market expects interest rates to adjust upward. Sun Xiaoming, president of Kunpeng International, said that even if interest rates will be raised in the future, floating interest rates are still the better choice.
Sun Xiaoming said that usually when lending, the interest rate is lower to save costs. At present, the interest rate of the floating rate is still lower than the fixed rate. Another consideration is that the floating interest rate can be changed to a fixed interest rate at any time, but the fixed interest rate cannot be changed to a floating interest rate at any time. When the interest rate is fixed, you need to pay a fine.
Therefore, consumers who choose a floating interest rate can decide whether to change to a fixed interest rate after raising the interest rate.
She said that even if the prime rate of the Canadian central bank is raised by another 0.25%, the floating rate is still lower than the fixed rate.
She said that although current interest rates are higher than they were two years ago, overall, they are still low in Canadian history. As house prices are high at present, lenders are sensitive and panicked when interest rates change slightly. In fact, the current interest rate is still a period of low interest rates in history. This situation will continue for some time in the future, and even if the central bank adjusts interest rates, it will not suddenly raise too much.
The problem of home loans is not due to the increase in interest rates, but the biggest impact on the market is the problem of loan policy. Stress tests are certainly a big factor, she says.
In addition, in the past, if the down payment of the buyer exceeded 35%, the bank generally did not need to check the income certificate or other information about affordability. At present, even if there is a 35% down payment, banks still have to look at the income proof, which makes it very difficult to increase loans.
