When thinking about the housing market in Canada, it feels very similar to a crazy rollercoaster ride. The ups, downs, twists and turns of the current real estate brings a lot of questions for many people. Each individual situation is different, however the one thing we can all agree to is the sudden inflation we’ve been feeling recently. Whether it’s the rise of house prices, the increase in grocery bills, or the jump in gas prices, we have all felt the impacts of the recent inflation. With that being said, the Bank of Canada announced the spike of interest rates expected to happen starting very early in 2022. But what does this mean for you as a current homeowner or as a future home buyer? Below we’ll discuss the impacts of high interest rates on the real estate market.
The rise in interest rates means higher and more expensive borrowing costs for everyone. Whether it’s a credit card loan, a private student loan, or a mortgage, the effects will be felt. Although it’s not clear exactly how high the rates will go, market research expects the rates to go up gradually by 1.75% over the next year. As a homeowner, it’s important to have an understanding of your current situation with your lender. If you’re thinking of refinancing your home, selling or changing lenders, speak to your professional mortgage broker for guidance. Additionally, if you’re thinking of moving and selling your current property, bear in mind the rise of interest rates with a new loan can change the current financial situation in your household. You want to ensure the change keeps your budget intact and does not effect the affordability of other essential costs you have.
If you are in the market to buy a home, or you’ve been thinking about it, now may be the time to take action. The interest rates will play a major role on your buying power and the borrowing amount a lender will offer. With that being said, this can affect the budget you have in place when searching for houses. While interest rates are still on the lower side, this is your chance to find a lower rate and lock it in before the increase happens. As a new home buyer, you have an advantage with being able to shop around until you choose something fitting in terms of a home and a mortgage. This gives you a chance to find a fixed mortgage, which can avoid any sudden future changes and spikes when interest rates go up.
The hot real estate market in Canada is here to stay and shows no sign of cooling down. With proper budgeting, asking the right questions, and guidance from your professional mortgage agent and realtor, there will always be something fitting for you. Higher interest rates are not scary when everything is planned out right. If you’re thinking of buying or selling but not sure if its the right time, reach out to your real estate agent with any questions, they’ll help guide you through this market.