Good ar­gu­ments for buy­ing a new home

Winnipeg Free Press - Section G - - HOMES - By Mike Moore

WITH all the fi­nan­cial is­sues in the U.S and Europe, there has been un­founded fear re­gard­ing the sit­u­a­tion in Canada.

The Euro­pean sit­u­a­tion is def­i­nitely a cri­sis, but the im­pact on Canada is dif­fer­ent than in the U.S. The Amer­i­cans have a much deeper hole to climb out of, and ev­ery one of their trad­ing part­ners makes that climb steeper. Given that Europe rep­re­sents 12 per cent of the U.S. econ­omy, the EU cri­sis hurts the U.S. re­cov­ery.

As we know, the U.S. hous­ing cri­sis was caused by reck­less lend­ing prac­tices. This hasn’t hap­pened in Canada and it won’t. The Cana­dian bank­ing sys­tem is still rated the best in the world.

The U.S. has en­tered into nu­mer­ous spend­ing and in­cen­tive pro­grams and, al­though these may pro­vide some stim­u­lus for the econ­omy, they will do noth­ing to help bal­ance the bud­get. In Canada, we ap­pear to have those fac- tors un­der con­trol. Al­though we be­moan the fact the govern­ment has halted the Home Ren­o­va­tion Tax Credit and the Eco En­ergy grants, what these may re­ally mean is the govern­ment doesn’t feel we need them any­more to bol­ster our econ­omy.

Four out of 10 home­own­ers in Canada have more than 30-per-cent eq­uity in their homes. That makes for a tremen­dous down­pay­ment to­wards a new home. There is con­cern about ris­ing in­ter­est rates, but many look at this in­crease in­cor­rectly. We look at where in­ter­est rates were at their ab­so­lute low­est, at a time when the govern­ment was ar­ti­fi­cially keep­ing rates down to stim­u­late a weak econ­omy.

This in­crease is sim­ply a re­turn to nor­malcy. Most Cana­di­ans lock into a five-year mort­gage. So, don’t look at in­ter­est rates from last year; look at them five years ago. That’s the fig­ure by which you will be com­par­ing fu­ture mort­gage pay­ments to past pay­ments. Us­ing that logic, we see that even with pro­jected hikes, in­ter­est rates will only be about .3 per cent higher than what you were pre­vi­ously pay­ing. All in all, mort­gage rates are and will con­tinue to be ex­tremely new-hous­ing friendly.

All signs of the Cana­dian econ­omy and, in par­tic­u­lar, the Man­i­toba econ­omy, point to­wards a per­fect time to pur­chase a new home. Our hes­i­ta­tion in 2009 may have been based on sound cau­tion­ary mea­sures, but now it’s time to take the step we’ve been con­sid­er­ing for the past few years.

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