Last week, the Bank of Canada increased its target for interest rates by another 75 basis points. This brings the total to a 300 basis point jump since March.
This would mean that for anyone sitting on a variable rate mortgage, there will be a substantial increase in the monthly mortgage payment that is going to be endured by Canadians.
This increased rate is taking about 20 percent of the buying power away from anyone needing to qualify for a mortgage.
This has been the biggest increase since the 1980’s and undoubtedly has a detrimental impact on the real estate market. As we’ve seen with sales volumes and well below the 10-year averages.
As we head into the fall season from a quiet summer, we’ll keep monitoring what’s going to happen.
For buyers, many have been waiting around to see what happens with respect to the rates. We expect them to go a little higher as the Bank of Canada may raise its rates yet again.
Runaway inflation at the moment is sitting at around 8%. So, due to the current economic situation, many buyers are holding back and waiting to see what happens.
For sellers, we’re not yet seeing an increase in inventory as they are actually down from a year ago.
Home sellers are following the buyers' footsteps, by waiting to see what happens before listing their house, as the market is still slow.
We’re seeing a price drop for homes of about 5-15 percent, depending on the type of property you own, the location, etc.
So, if you’re looking to buy a home, this is a great time to do so.
You could post an offer and have a chance to negotiate a good deal, as there aren’t too many people looking to buy at the moment.
While for sellers, it’s crucial for your home to be looking at its absolute best regardless of if your home is older. Maintenance should be one of the top priorities. Have your exterior looking great, garden maintained, interior lights working, and overall a full tuneup.
View our checklist of some of our recommendations for getting your home ready.
If you have any questions about anything real estate, please give us a call. We’re always available to answer your questions.