Home search: Musician beats interest-rate hike

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      Like many of his acquaintances, Eric Mendes was hesitant about buying a home.

      “Everybody talks about ‘Oh, no, you have to wait. Someday the market is going to crash,’ ” Mendes recalled in a phone interview with the Georgia Straight.

      They believed that because prices were heading for a collapse sooner or later, that would be the right time to buy.

      “They are, like, years waiting, you know, for the crash. And, yeah, I was one of them,” the 38-year-old graphic designer said.

      But the longer he held out, the less he was convinced that he’d be better off. In January 2017, Mendes got himself preapproved for a mortgage, which turned out to be propitious timing.

      The following summer, the Bank of Canada raised—for the first time in seven years—its key lending rate, which influences interest rates on mortgages. The increase, from 0.5 percent to 0.75 percent, was followed by four more hikes. On October 24 of this year, the central bank brought its benchmark rate to 1.75 percent.

      More increases are anticipated. In announcing the latest adjustment, senior deputy governor Carolyn Wilkins indicated that the bank is looking at a rate of 2.5 percent to 3.5 percent down the road.

      “Right now, with the mortgage rates rising, I would not be able to qualify,” Mendes said.

      Two months after getting preapproved, Mendes signed up realtor Richard Morrison. Mendes was renting in Vancouver, and with Morrison’s guidance, he began to gain more confidence. The two are of a similar mind when it comes to personal finances.

      Even before his mortgage preapproval, Mendes knew that his big challenge would be coming up with a down payment, so he saved all the money he could. He shared a car with a friend. He brought lunch to work. The São Paulo native formed his own Brazilian band called Sambacouver so he could earn extra money playing in clubs and enjoy the free nightlife.

      For his part, Morrison is an advocate of financial discipline. He wrote a chapter titled “Best Advice: Investment Is Sacrifice” in the book Real Estate Action 2.0 by Vancouver-based investment adviser Ozzie Jurock.

      In January this year, Mendes moved into a two-bedroom condo in Surrey’s fast-growing city-centre area, known traditionally as Whalley.

      Meantime, Moody’s Analytics, a U.S.–based financial-intelligence company, issued a report in October 2018 stating that the Canadian property market is not about to suffer from significant pricing declines.

      In Surrey’s city centre, Fraser Valley Real Estate Board figures show that the median price of condos has increased by at least 21 percent over the past year. In October this year, it was $419,500, compared to $345,500 for the same month in 2017.

      Mendes, who is single, purchased his two-bedroom condo for less than last year’s median price. He said that had he waited some more, he could not have afforded a similar property.

      “I am very glad and not looking back,” Mendes said.