September News and Rate Advisor

Welcome to the September issue of the News & Rate Advisor. Current Discount Mortgage Rates for Sep 2017 Rate Variable Rate 2.20% 1 Year 2.44% 3 Year 2.69% 5 Year 2.94% Prime Rate 2.95% Note: * Rates subject to change and OAC. Canadian Qualifying Rate Sep 2017 Rate 4.84% Source: Bank of Canada Current Bank of Canada Rate & Prime Rates Sep 2017 Sep 2016 Sep 2015 Bank Rate 1.25% 0.75% 0.75% Prime Rate 2.95% 2.70% 2.70% Source: Bank of Canada Nationwide Building Permits Jul 2017 Jul 2016 Jul 2015 Residential $5,010,106,000 $4,087,851,000 $5,005,523,000 Commercial $2,911,455,000 $2,554,845,000 $2,836,355,000 Total $7,921,561,000 $6,642,696,000 $7,841,878,000 Source: Stats Canada - preliminary figures Average House Prices by Province Jul 2017 Jul 2016 Jul 2015 National $478,696 $480,743 $437,699 Yukon $376,909 $344,863 $351,916 Northwest Territories $366,991 $388,352 $398,889 British Columbia $698,718 $663,411 $608,294 Alberta $396,946 $403,666 $394,977 Saskatchewan $291,399 $303,414 $305,431 Manitoba $283,978 $275,914 $273,164 Ontario $517,379 $517,831 $454,098 Quebec $303,083 $284,662 $278,760 New Brunswick $173,797 $164,961 $168,412 Prince Edward Island $192,605 $180,427 $171,140 Nova Scotia $228,399 $221,689 $217,236 Newfoundland $244,653 $252,846 $275,072 Source: CREA - Most Recent Month Reported Average House Prices by City Jul 2017 Jul 2016 Jul 2015 Yellowknife $366,991 $388,352 $398,889 Vancouver $1,029,786 $1,007,687 $866,772 Victoria $644,510 $580,555 $519,379 Edmonton $383,624 $384,504 $372,910 Calgary $458,480 $469,325 $459,958 Saskatoon $325,718 $346,879 $350,246 Regina $319,595 $314,714 $309,696 Toronto $746,218 $709,825 $609,236 Hamilton-Burlington $536,595 $491,360 $434,730 Ottawa-Carleton $391,119 $374,431 $369,718 Quebec City $268,884 $266,578 $276,561 Montreal $378,401 $349,218 $341,594 Fredericton $187,119 $181,833 $178,479 Saint John $179,048 $168,266 $178,089 Halifax-Dartmouth $299,847 $292,511 $287,288 Winnipeg $294,216 $282,684 $281,684 Source: CREA - Most Recent Month Reported

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Is a home equity line of credit right for you?

(NC) Buying a new home is an exciting but often stressful experience. The variety of financing options now offered by lenders is overwhelming.

One of the most popular options is a home equity line of credit. With interest rates typically lower than other forms of credit, this line of credit can help you reach your financial goals. However, there are several factors to consider when deciding if this product is right for you.

Banks market home equity lines of credit under different names, which might make it challenging to recognize when you are being offered one. They are commonly combined with a regular term mortgage in the form of a “readvanceable mortgage.”

When combined this way, the credit limit on your home equity line of credit will often increase automatically as you pay down the principal on your mortgage. A readvanceable mortgage may also tie together other credit and banking products —such as personal loans, credit cards and car loans — under a single credit limit.

Benefits of bundling these products together include convenience and lower interest rates. But the downsides include fees and restrictions if you want to switch to another lender, and variable interest rates that could increase on short notice. Your financial institution also has the right to demand that you pay the full amount owing at any time.

When deciding if this lending product is right for you, remember that your home is likely your biggest investment. You should beware of overborrowing against its equity, especially if you're counting on it to fund your retirement.

“Most lenders allow you to make interest-only payments on your home equity line of credit, making it easier to delay repaying the principal balance,” explains Lucie Tedesco, commissioner of the Financial Consumer Agency of Canada. “Continually borrowing against your home's equity without repaying the principal can jeopardize your long-term financial security. For instance, in the event of a housing market correction you might owe more than what your home is worth.”

Ask yourself if a low interest rate and easy access to credit may encourage you to spend more than you can afford to pay back. You could find yourself in a debt spiral, using additional home equity just to stay current on your mortgage. This could make you more vulnerable to unforeseeable events, like job loss, illness or an interest rate hike.

Consider creating your own plan to pay down the principal amount borrowed over a fixed period. Aim to pay more than the minimum payment or interest every month. With a home equity line of credit, there is usually no penalty to pay back as much as you can at any time.

Find more information online at canada.ca/money.

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