A new report from the British Collumbia Real Estate Association forecasts that the posted five-year mortgage rate will stay at 5.24 per cent for the rest of 2012 before gradually going up to 5.85 per cent in 2013.
The report singles out the new mortgage regulations as the biggest factor to changes in the mortgage market in 2012. “In lowering amortization from 30 years back to 25 years (the prevailing amortization period in 2004) the government has now completely undone its prior, and probably misguided, forays into the mortgage market,” notes the report.
“The change from 30 years to 25 year amortizations will have a fairly significant impact on monthly mortgage costs, similar to the impact of roughly 1 per cent increase in mortgage rates.”
The forecast argues that little change is expected to the 1-year rate for the next six months; however, the BCREA expects the 1-year rate will go up when the Bank of Canada raises interest rates in 2013.