The London and St Thomas Real Estate Board

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Interest Rates

Prices, Mortgage Payments and Interest Rates

In fact, in the second quarter of 2006, 2,239 of the active listings with LSTAR – 70.1% of the Association’s 3,134 active listings for that period -- were priced at or below the average cost of those homes purchased through Canada Mortgage and Housing Corporation’s 5% plan for that same period – i.e., $167,299. The whole point of CMHC being in the mortgage insurance business in the first place is to allow more people to enter the housing mortgage by reducing the amount of down payment required. Therefore the average cost of homes purchased through the plan provides a good benchmark for affordability.

Historically low interest rates make homes more affordable

The size of the mortgage you can arrange, based on payments you can afford, depends on interest rates. The lower the rates, the larger the possible mortgage and the more affordable housing is. Right now interest rates continue at historic lows, making housing more affordable than it was twenty-five
years ago. Take a look at how low our current interest rates really are.

The reality is, despite the increase in housing prices in the Association’s jurisdiction, the cost of carrying a mortgage has remained remarkably stable over the past fifteen years. Take a look at CMHC's
chart outlining typical monthly mortgage payments . While this table does not take into account changing salaries or inflation factors, it does illustrates how lower interest rates continue to make prices affordable for many people. It uses overall average prices for homes in the Association’s jurisdiction less an assumed 10% down payment and typical monthly mortgage payments based on a five-year term at the prevailing rate amortized over 25 years. Note that the monthly payment on a $134,907 house in 1990 at a time when the prevailing rate stood at 13.24% is actually $367.01 more than a house costing $178,058.00 in 2005 . . . because of the lower interest rate.

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This information is provided by the London and St. Thomas Association of REALTORS®.
The information herein is believed to be accurate and timely, but no warranty as such is expressed or implied.