Fast forward to 2014, both CMHC and Central 1 Credit Union, trade association for BC and Ontario credit unions, are forecasting a situation of rising mortgage rates.
According to CMHC’s Housing Market Outlook 2013: “For 2014, the one-year posted mortgage rate is expected to rise and be in the 4.00 per cent to 5.00 per cent range, while the five-year posted mortgage rate is forecast to be within 5.50 per cent to 6.25 percent, consistent with higher economic growth in 2014.“
At Central 1 Credit Union, the trend for 2014, 2015 and 2016 points towards higher mortgage rates, with the five-year posted fixed term at 6.4% in 2016. Compare that to the current mortgage rates for a five-year posted fixed term still below 4.0% in Q1 2014.
Alternative Financing for Private Borrowers
With the stricter CHMC program and forecasted rising mortgage rates, alternative financing will likely become more prevalent. That’s because with banks and financial institutions, such as credit unions, a FICO credit score of 650 or above are usually required for a mortgage. In addition, they also consider your income statements for the past three years. For private borrowers, credit scores and income records are not as significant, as private lending requirements are based on your home’s equity.