Ken Buxton on RE/MAX Housing Market Outlook 2010
“Outlooks are just that …outlooks. What all buyers should do in this market before buying is be comfortable and in a position to pay 5 to 6% interest on their mortgage when they renew. Don’t over extend and plan for a rate increase. If your are buying a family home and intend to live their for several years don’t be too concerned with forecasts , you will be fine in the long run. However, if you are a speculator, you better have a great sense of timing.”
You heard the man. Read and execute orders.
Thanks Ken for the great insight.
Posted by: Deya Bautista - Real Estate Broker working as part of the McGill Immobilier team. Specializing in high end condos in downtown and Old Montreal. For buying or selling contact Deya at: 514.917.7889 
Ken has very good advice here. He advises that when people are buying a home today, they should factor in interest rates of 5 to 6%.
This is very good planning, as interest rates eventually are going up, and when they do, you will look smart if you anticipated this increase.
Often times in low interest rate environments, such as the one we are in right now, people do in fact over extend themselves. This means that sometimes they are barely managing to make payments on a mortgage, even when the interest rate is prime, or close to it.
One the interest rates start going up, this person is going to find that they are in a very tough situation. if they are in a variable rate adjustable mortgage, not only is their interest rate going to go up, but so too will their payment.
This is why it is so crucially important to know the terms of your mortgage once it is set up. Namely, are the payment fixed or will the payment rise and fall as interest rates rise and fall.
On one property I have a variable rate adjustable mortgage which means that my payments rise and fall as interest rates rise and fall. On the other 3 properties, my mortgage payments are fixed, as I have a 5 year term and a five year fixed rate. As such, know what my payments are going to be each month.
Best Regards,
Neil.