Advice for new home buyers as housing prices drop

With housing prices falling in Waterloo Region, the market is starting to see more home buyers looking for their first home.

The Bank of Canada increased interest rates this year to 3.25 per cent, causing housing prices to drop. For those who have mortgages, some have seen their monthly costs go up by 25 per cent. For a $500,000 mortgage for example, their monthly payments would go from $2,300 to around $3,000.

Marc Rivard, the chief lending officer at Your Neighbourhood Credit Union (YNCU), said there has been a significant correction in the region making room for new home buyers to come into the market. He tells them to keep their budgets in mind when considering to buy a house, especially when it comes to choosing either a fixed or variable rate mortgage.

“Housing prices have dropped in accordance to affordability,” said Rivard. “If you're buying and selling a house in the same market, you are probably in a break-even situation. but if you are getting into the market as an investor you may not be getting into the same position.”

Rivard urges home buyers to have a financial advisor they can trust to help them make good financial decisions.

Some government programs for first time home buyers like an Insured mortgage that would allows a five per cent down payment or taking money out of your RSP. Another helpful tool coming out next year includes the Tax-Free First Home Savings Account, which allows someone to save up to $40,000 for their first home.