1. this year vs next year
2015 2016 SAVINGS
Purchase Price (PP) $500,000 $550,000 $50,000
Interest Rate 3.09% 4.09% 1.00%
Mortgage (80% of PP) $400,000 $440,000 $40,000
Monthly Payments $1,911 $2,336 $425
Total Interest 5 yr term $57,177 $83,795 $26,618
Mortgage balance (end of term) $342,487 $383,635 $41,148
To Buy or not to Buy? Winter 14/15
With recent positive economic and Real Estate trends, it is important to recognize some
very meaningful facts when deciding whether the time is right to purchase Real Estate.
 Since 1977 there have been only 7 of 37 yrs where detached house prices have dropped in Greater
Vancouver.
 Largest drop was during 1981 (approx 20%) however it is important to recognize that house prices
nearly doubled during previous year, 1980.
 During the 2008 economic crisis, house prices dropped approx 10%, however prices recovered the
very next year.
 As we move into 2015, prices have been fairly stable for 6-7 years, however values are trending
upward.
 Fixed Mortgage rates remain near historic lows.
 Since 1977, on a yearly basis, house prices have remained level or increased 30 of 37 years.
Let’s assume that house prices increase by 10% over the next year and that the 5 yr Fixed
rate increases by 1% to a more normal discounted rate of 4.09%. See the chart below,
using a $500,000 home for example:
In summary, if rates return to more normal levels, Real Estate prices increase and a
purchase is delayed for another year…
22% increase in monthly payments
47% increase in total interest paid over 5 yrs.
Considerably higher mortgage balance at the end of 5 yr term…less equity.
Please feel free to contact me at any time for further advice or assistance.
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Proud Recipient of the RBC President’s Award