2013 REAL ESTATE and Interest Rates

Published 12 February 13 02:21 PM | Deedar Ghatehorde 
I am a Realtor working with Buyers interested to buy Homes for sale in Mississauga, Brampton and Toronto.  The question of the future of interest rates always comes up.

Interest rates have a major impact on the ability to of the Buyers to buy real estate, whether it be commercial or residential.  Interest rates also have an impact on the other sectors of the economies.

As said in my earlier Blogs, my take is that the interest rates are not going up in the next 2 to 3 years.  My rationale for that is as follows:

Our major trading partners are the USA.  If the interest rate goes up in the US, the debt servicing cost for the US deficit will jump by a whopping 50% if the interest rate goes up by .5% (very simplistic estimate).  The Treasury and Bonds will also loose.  There is no way that the US can risk raising interest rates.

The real estate construction market will result in higher unemployment if the interest rates go up.

If the cost of borrowing goes up the Canadian manufacturer’s cost of manufacturing goes up and there is the danger of manufacturers going back to US or Mexico increasing our unemployment.

The only other hidden factor which can trigger rate increase is inflation.  The middle calls in the western economies including Canada and the US has no discretionary spending ability left.  A big portion of their income goes in taxes, Health care, taxes on goods (13% on all services and goods in Ontario) and fuel costs.   The middle class is so much squeezed that there is no room for essential goods prices to go up.  Not so far as yet.

There is a possibility that the rates may go down.

Taking all this into consideration the scenario shall remain the same.  Interest rates are not likely to rise in the near future for quite some time.

So, buy your property and lock in lower interest rates and enjoy the fruits of future appreciation in real estate.  The rest of the world is lining up to migrate to the west and real estate and land is not expanding.  Safest Bet – invest in real estate, Buy homes in Mississauga, Brampton and Toronto and rest of Canada.

For More visit www.valuehomes.ca

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