Did You Know...

A Mortgage Broker works for you, the client, whereas Bank Specialists are employed by the financial institution.

Affordability is on the rise.

While the process of buying a home is prone to drain the ol' pocketbook, that pocketbook is getting a bit of a break lately as housing affordability reaches a new high.

We're at an interesting point in history -- housing prices have started to decrease and interest rates are at record lows. Combine the two and you have an ideal time to purchase a property.

According to RBC's housing affordability reports, by the time the fourth quarter of 2008 rolled around, you could get a lot more house for a lot less money, compared to a year earlier. The average standard, two-storey home in Canada cost $348,969 at the end of 2007, up by 9.6% compared to a year earlier. To qualify for a mortgage on that type of house, you had to bring in $86,612 -- and that's the Canadian average. In Vancouver, you had to make $146,739. By the end of 2008, that housing price had dropped to $336,700, and the qualifying income dropped to $84,500 (and a mere $141,200 in Vancouver). That was also before the Bank of Canada's interest rate reached its historic 0.25% low -- which is essentially a more influential factor when calculating housing affordability. Any 10% drop in housing prices can be wiped out with a 1% gain in interest rates -- but, luckily, it works the other way too.

That 2007 home, worth $348,969 with a 25% down payment and 25 year amortization, would cost you $1,574.78 a month at an interest rate of 5.35%. At the end of 2008, not only does your down payment shrink by a few grand if you opt to put 25% down -- $84,175 -- but so does your monthly payment. At 3.85% interest, you're paying $1,307.88 per month. Over a five-year term, you're saving $16,014 -- and that's not counting the interest you're saving.

So what does this mean? Well, if you've been sitting on the sidelines waiting for that time to buy, let me tell you that time has arrived. Give me a call to see how much more you can afford compared to last year.

Axiom Mortgages, June 2009

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At Greenwood Estates and Mortgage Company, Mission, BC, we represent dozens of lenders and loan programs across Canada. With our experience in banking and finance we can help you find the best rates for your needs. Many years working in the banking and finance industry has given us a great network of contacts that we can use to find the best product for you. Mortgages, business loans, refinancing, credit lines and debt consolidation are our business.

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