The Bank of Canada has been increasing interest rates, and Canadians are starting to wonder what this means for the real estate market. In a nutshell, higher interest rates can have both positive and negative effects on the real estate market in Canada. Let’s take a look at how these changes might affect Canadian homeowners and potential buyers.
Effect on Homeowners and Mortgage Holders
For current homeowners and mortgage holders, higher interest rates will likely mean an increase in their monthly payments if they are on a variable rate mortgage. This could make it more difficult to continue making payments on their existing mortgages or even pay off their mortgages faster. If you are getting a new mortgage right now, I recommend going with a 1 year fixed rate. It’s important to remember that while a rise in interest rates might seem like bad news, it isn’t necessarily a bad thing—it all depends on your personal financial situation.
Effect on Potential Buyers
Higher interest rates can also have an effect on potential buyers looking to enter the real estate market in Canada. With rising interest rates come more expensive mortgages, which could make it more difficult for some people to qualify for a mortgage keeping some buyers out of the market for buying a home or investment property. With lower demand for real estate comes lower prices, so now may be an excellent time for those who do qualify for a mortgage to enter the market when there is little competition.
Effect on Existing Properties
The effects of higher interest rates don’t just impact potential buyers; they also affect existing properties in the Canadian real estate market. For example, if demand drops due to fewer people able to purchase homes under new terms, then existing property values might go down as well. This could be good news for potential buyers who are looking for good deals but bad news for sellers who are hoping to get top dollar from their properties.
Conclusion:
Overall, higher interest rates have both positive and negative implications when it comes to the real estate market in Canada. Current homeowners and mortgage holders need to consider how these changes might affect them financially while potential buyers should think carefully about whether now is the right time to purchase a property. Additionally, existing property owners should hold their properties and keep an eye out for any changes in value that could result from lower demand due to increased borrowing costs. Ultimately, you must decide what is best for you when taking into account all of these factors!
