One of my recent listings attracted 3 offers on the day after the first showing…. and, yes, the open houses are again well attended. 

The March and April increases in number of sales are of some significance. Reason – the abovementioned return of confidence assisted by the currently prevailing low interest rates. These are at historic lows and the Bank of Canada has, in the past weeks reduced its “bank rate” to the amazingly low level of 0.25% - a first in this country’s history. (This is the rate at which the BOC lends “overnight” money to the commercial banks).  Those banks’ prime lending rate is now sitting at 2.25% and mortgage loan rates have dropped to as low as 3.69% in some isolated cases for a 5 year term and 2.85% for a “variable rate”  mortgage.

In practical terms this translates to (for example) a 5 year term mortgage of $600,000 taken out this time last year which would have attracted a monthly payment of $3256/month, with a 35year amortization (35 yr full payout horizon).  The same mortgage today would attract a monthly payment $2592/month. This is a saving of $664 pm or almost $8,000 per year!  On each $100,000 of borrowing the saving would be about $110 pm or $1325 per year. If, however, one decided to opt for a variable rate mortgage at Prime plus 0.6% (presently 2.85%) that saving would be $167 pm or over $2000 per year. 

Remember all of the above has occurred in a one year time frame. Is this significant? – you bet it is ….and the variable rate is made further attractive based on the Bank of Canada’s recent statement that it “won’t be changing rates until after June 2010”.  I am indebted to my colleague and friend Kerry Casidy of Ambro and Associates, Mortgage Brokers for these calculations. I have reworded some of the comments – accurately, I hope.

Overall North Shore demand is improving (confidence certainly returning) with almost all inventories higher than this time last year. April is markedly the strongest month thus far in 2009 and the “bargain basement” purchases evident in the past few months are becoming scarcer – i.e. cheeky, low ball offers are receiving less respect! Remember too, as I’ve said before, a lower average price for one 4 month period vs the corresponding period a year before may well be distorted if a case can be made for generally “lower end” homes being the ones that are selling.

 Again, visit my website to see and “hear” the new developments.  Continue my commitment to keep you... www.OnTopOfTheMarket.ca - the “go to” site for North Shore Real Estate analysis and jumping off point for FULL market listing information.

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