Mortgage vs. HELOC
Potential homebuyers in the Kitchener, Ontario area have a lot to look forward to in the coming year as far as house inventories and interest rates. It seems as though each month is showing more positive results than the previous month. What does this mean for Kitchener residents or those hoping to become residents? Read below and learn about the housing market in Kitchener, as well as the competitive mortgage interest rates now being offered.
The housing market in the twin cities of Kitchener-Waterloo was exceptionally strong throughout 2013 due to both low interest rates and a solid economy. The home sales that showed a lot of growth were single-detached homes (both new and resale) in the range of $400,000. However, the biggest boom was in homes ranging from $500,000 to $750,000. REMAX indicated that this category had a 40% increase over the previous year and growth is expected to continue through 2014. The average income in this area is $92,000, which bodes well for the housing market.
Growth in the housing market has already begun in the Kitchener area. The Kitchener Waterloo Association of Realtors reported that, although extreme cold and snow hampered sales at the start of the year, February sales were up 34% from what was seen in January 2014. Of special interest is that, although housing sales overall were down in January, condo sales were up more than 54% from January 2013. The Association also indicated that even though cold weather slowed down sales, it's also going to be responsible for a surge of homebuyers come spring and summer.
With the housing market experiencing a healthy growth so far this year, one would think that interest rates are also increasing, however, this has not been the case as of yet. Potential homebuyers are still experiencing historically low interest rates on mortgages. Borrowers are also finding interest rates slightly lower in Kitchener than in nearby provinces. Mortgage rates are ranging from 2.59% for a 2-year term loan to 2.99% for a 5-year term loan. The 2.99% rate is not even close to the 5% rates posted by other lenders in other areas. What does this mean for Kitchener residents? It's definitely an indication that Kitchener could be a very ideal place to buy a home, and the time has never been better.
The two most common types of mortgages in Kitchener are open mortgages and closed mortgages. Open mortgages generally have higher interest rates than closed mortgages, but open mortgages allow the borrower to make larger payments or pay off the loan early without penalties. Closed mortgages are often used in conjunction with long-term mortgages and fixed rates. Fixed rate mortgages are the most popular in Kitchener, as well as other provinces in Canada. Fixed rate mortgages lock in an interest rate for the life of the loan, as opposed to variable rate mortgages. Fixed rate mortgages are ideal if one anticipates an increase in interest rates.