
Despite the current uncertainty in the Canadian and global economy, the Canadian Real Estate Association claims that residential house sales in Canada actually reached the highest level ever for the month of October 2009. As well, the average sale price was up by over 20% from October 2008. This increase in residential house sales is being credited to low interest rates. Currently the average mortgage rate is 4.55, which is a decline from 5.41 which was the average for 2008. As well, consumer confidence is also being credited for the increase in residential home sales.
Out of all the provinces, British Columbia had the highest monthly gain in residential real estate sales; B.C. also had the most dramatic decline in sales last year. British Columbia has traditionally always had the highest real estate prices as well as the highest average mortgages. Vancouver's sales have risen to 117% over the past year. The Canadian Real Estate Association is now forecasting national activity in residential home sales will reach over 460,000 units in 2009 which is an increase of 6.6% from last year. The national MLS home price average is forecast to climb 4.2% in 2009; this will reach a record of $317,900.
This is the first time that residential home sales have increased in price since the spring of 2008. This means that purchasing a home may now be less affordable for Canadians, according to a new study by the RBC Housing Affordability survey. This survey measures the proportion of pre-tax household income needed in order to cover all the necessary costs of home ownership. This measure rose for all housing types in the third quarter, with standard bungalows and two storey homes seeing the biggest gain. Demand for housing has now outstripped supply since the recovery in real estate sales began last winter.
For those Canadians who want to take advantage of the low mortgage rates to buy a home, mortgage insurance coverage must also be considered. Most lending institutions require mandatory mortgage insurance. However, mortgage insurance
does not have to be obtained through the lending institution, although almost all do offer this coverage. Term life insurance in an amount that covers the mortgage can be a better alternative to bank mortgage insurance. Term life also offers several advantages that bank mortgage insurance does not. Term life insurance offers the homebuyer the advantage of naming the beneficiary of the policy. When purchased through a lending institution, the mortgage insurance policy names the bank as the beneficiary. When using term life insurance the policy is owned by the homebuyer,
not the bank. Another advantage to using term life to insure a mortgage is the option of purchasing a policy that can be converted into whole life insurance upon completion of the term. This allows the homebuyer to buy a term life policy when they are in good health, and the rates are less expensive. Some convertible policies will not require any additional medical information, but will be based on the original health status.
When shopping for a home, and mortgage, consult with your insurance broker about using term life insurance to insure the mortgage and explore all the options. Many times term life insurance is also cheaper than the coverage offered by the bank. For more information on using term life insurance, please visit our
mortgage insurance page.