Ank  Bohra

Ank Bohra

Sales Representative

Shrine Realty Brokerage Ltd.

Mobile:
(647) 766-0588
Office:
(647) 766-0588
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The impact of current rate hikes in the real estate market.

The Bank of Canada raised its benchmark interest rate by 0.25% on July 12, 2023, the eighth consecutive increase. This is the highest rate since 2008, and it is an effort by the central bank to cool down the country's overheated housing market.

The rate increase is expected to have a significant impact on the real estate market. It will make it more expensive to borrow money, which could lead to a slowdown in home sales and price growth. A recent poll by Zoocasa found that 70% of respondents said that another interest rate hike by the Bank of Canada would negatively affect their interest in real estate.

The impact of the rate hike will vary across different markets. High-priced markets like Toronto and Vancouver could experience a more significant slowdown, whereas more affordable markets like Calgary and Edmonton might see a milder effect.

Overall, the rate hike is likely to cool the Canadian real estate market. However, it is important to remember that the market is still strong, and a major crash is unlikely. The rate hike will mainly make it harder for some buyers to afford homes and could lead to a deceleration of price growth.

Here are some specific impacts of the rate hike on the real estate market:

  • Home prices are expected to decline, particularly in markets with already high prices, due to the increased cost of borrowing.
  • Home sales are likely to slow down as the rate hike makes it more challenging for some buyers to qualify for mortgages, especially in competitive markets.
  • Mortgage rates will rise, increasing the cost of carrying a mortgage and potentially straining homeowners' finances.

The rate hike demonstrates the Bank of Canada's commitment to cooling the housing market. However, it is important to remember that the market is still strong, and a major crash is unlikely. Instead, the rate hike will mainly make it harder for some buyers to afford homes and could lead to a slowdown in price growth.

If you are considering buying a home, it is important to understand the impact of the rate hike and potentially wait for the market to cool before making an offer. Consulting with a mortgage professional can help you assess how the rate hike will affect your financial situation.

Here are some tips for buyers and sellers in the current market:

  • Buyers: Be prepared to act quickly and make compelling offers. Additionally, explore less expensive homes or markets with less competition.
  • Sellers: Price your home competitively and consider listing it sooner rather than later, as the market is expected to cool down in the upcoming months.

The current interest rate hike has significant implications for the Canadian real estate market. It is important to stay informed about the latest developments and make well-informed decisions that are right for you.

 

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