News Releases
Pre-approved home financing remains one of the best tools for homebuyers entering the still highly competitive housing market. Today’s announcement by the Canadian Mortgage and Housing Corporation that housing starts will continue to remain strong this year is a reminder that buyers who may face bidding wars for properties in highly sought-after neighbourhoods need to be able to react quickly if they want to secure their dream home.
“It is crucial that home buyers know in advance how much they can borrow and have a detailed mortgage strategy in place before they enter the market,” said Maria Racanelli, Vice-President, Personal Banking, BMO Bank of Montreal. “In highly competitive neighbourhoods around the country we have seen bidding wars push the purchase price up as much as 10 per cent or more over the original asking price, so it is important to know your limits.”
Racanelli advises that home buyers in this current environment start with a clear understanding of their monthly cash flow. “You should begin with a list of your fixed expenses including car and insurance payments, credit card debt payments, utility bills, food bills etc. and then add in allowances for unexpected items such as car and home repairs,” she said. “Getting a handle on your true level of spending is a major step in determining how large a mortgage payment you can manage.
“While stretching a bit to purchase your dream home is commonplace, it is important that you don’t get caught up in the bidding excitement and lose track of what you can realistically afford to spend.”
Housing activity remains strong right across Canada,” said Marc Mongrain, Vice President, Real Estate Finance, BMO Bank Of Montreal. “In the GTA for example, builders continue to enjoy wonderful success in both single-family housing and high-rise condominiums. Consumer demand remains brisk for housing product and we expect this trend to continue over the foreseeable future.”
In a market commentary released today, Paul Ferley, Assistant Chief Economist, BMO Financial Group, reiterated that the Canadian housing market will stay strong for some time. “The increase in housing starts reflected broad-based gains in most regions in the country. Though the current level of starts is down from the 2004 average it still represents a historically strong level of activity. Residential construction continues to benefit from low mortgage rates and rising home prices.”
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