The outlook for Canadian mortgage brokers is largely positive with no rate rise on the horizon, according to the Canadian Association of Accredited Mortgage Professionals (CAAMP).
A lower than expected unemployment rate, a sharp increase in housing affordability and low interest rates have all combined to increase community and economic confidence.
But while confidence is improving, the Canadian central bank is unlikely to move interest rates anytime soon according to economists.
Unlike Australia, where the cash rate has increased by 50 basis points over the last two months, Canada’s official interest rate is not expected to move until late 2010 or early 2011.
Canadian economist Benjamin Tal said the decision to leave the official cash rate at 0.25 per cent would hurt the economy, but the outcome could be worse if the government decided to move on rates too quickly.
A study conducted by CAAMP revealed that the vast majority of Canadians were uneducated when it came to interest rates.
Of the 2000 homeowners surveyed, the large part thought 4.39 per cent was a fair interest rate. However, the average mortgage interest rate for home owners' mortgages is 4.55 per cent.
Robert Daniel, managing director Maritz Research in Canada said mortgage brokers were needed to educate potential homebuyers as to the true cost of their mortgage.
“Many homeowners are unaware of how much their mortgage will cost them. Mortgage brokers need to put a consumer’s perception in sync with reality,” Mr Daniel said.
According to Mr Daniel, consumers appreciate the advice a mortgage broker gives them, with 80 per cent likely to return to the same broker for other investments in the future.
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