Why Buy Now? A First-Time Homebuyer’s Guide to Mortgages and Market Trends in 2024
Navigating mortgages can feel overwhelming but understanding how rates impact the market can help you make a smart choice. With recent interest rate cuts by the Bank of Canada (BoC), now might be a great time to buy.
How do Lower Rates Affect Home Prices?
When mortgage rates drop, borrowing becomes more affordable, which will bring more buyers into the market. As more people compete for homes, prices tend to go up. This is especially true in cities that have seen the most growth in population due to migration, like Calgary, Edmonton and Winnipeg.
In Calgary, demand for homes is already high, and lower rates might push prices even higher as more buyers enter the market.
In Edmonton, the market is more stable, but lower rates could attract more first-time buyers, boosting competition.
Winnipeg is known for its affordability and may see an increase in buyers, potentially driving up prices in popular areas.
How Can I Lower My Monthly Payments?
Not all rates are created equal. Speak with a mortgage professional to explore your options and the best fit for your goals. Timing the market now could save you money and help build equity in your new home.
First-time homebuyers have the option for a 30-year amortization, which lowers monthly payments by extending the repayment period. This flexibility can help manage costs better than a 25-year option, giving you more room in your budget.
Fall and winter tend to slow the market. Let’s face it, who wants to move in the cold? However, this slow period tends to allow for more incentives and flexibility in pricing for new construction. Lower purchase prices mean lower monthly payments for you.
What Does This Mean for Today’s Market?
Lower rates and longer amortization options mean lower monthly payments, which is great news if you’re thinking about buying today. For example, a small rate cut could save a homeowner around $100 per month, depending on the size of the loan. However, as more buyers take advantage of these lower rates, those rising prices could offset the savings from lower rates, meaning your overall cost could end up being higher. Acting now lets you enter the market with both lower rates and current prices along with the option to stretch your amortization to 30 years, giving you the perfect opportunity to keep your monthly payments as low as possible for the next 5 years, before the market heats up even further.
Now is the perfect time to take advantage of lower mortgage rates, as increased demand may lead to rising home prices and higher monthly payments in the near future. Speak with one of our trusted Mortgage Associates and connect with our sales team today to see how you can secure your new home while market conditions are still in your favor!
