CMHC forecasts a healthy housing market for 2012-13…. but fixed mortgage rates have started to climb.

CMHC issued a report that says the economy will expand at a moderate pace over the next few years, as reported in The Spectator.  The Bank of Canada should also keep it’s trend setting rate low until mid 2013.    This means Variable mortgage and secured lines of credit rates will remain low.

The report also says the average house price in Canada is expected to hit $368,900 this year.  But, a closer look at the Greater Toronto Area market shows that house prices are climbing much faster.   A lack of supply and a pent up demand, together with record low interest rates are fueling price increases.   Reports of homes being sold above asking are popping up outside of Toronto.. including Milton, Georgetown, Oakville, Burlington and Hamilton.

If you’re in the market for a home, my advice would be to not wait til the Spring market.  The market is now.  Experienced realtors are telling me they have priced a 5% increase in the first 2 months of 2012.  Waiting could cost homebuyers $18,000 or more.

FIXED MORTGAGE RATEShave started to climb.  Earlier this week we saw RBC and TD pull their special mortgage rate offers…   BIG SIX Banks don’t like to compete in the wholesale mortgage market with mortgage brokers… when these 2 banks realized no other BIG SIX bank was offering this rate, they quickly withdrew the offer…   read this article...  the BIG SIX banks are calling a truce?   What does that mean…?  Don’t you want your banks to compete?  And that last paragraph by BMO’s Frank Techar is priceless.. “We went to 2.99 per cent to draw attention to the benefits of having a mortgage with a maximum amortization of 25 years”.   This does make me a laugh a little… BMO’s NO FRILLS mortgage was a way to gain market share and entice borrowers into a restricted and closed mortgage product…  Mortgage Brokers already had access to this rate and a NO FRILLS product through another lender… but it’s not a great product and the restrictions are costly…Most brokers will not recommend or even offer this product to their clients.

The ripple effects of this ‘truce’ are that wholesale mortgage rates have started to climb… ING and National Bank have also increased their rates.  This could be temporary but if the Greeks get their act together and the U.S. economy starts to improve, we will see rate hikes….  My advice is get your mortgage preapproval now…. These are historical low interest rates…  I’m not sure they will be here for much longer.