Here's what it means for you...
All things being equal, a central bank cuts the lending rate when it wants to stimulate the economy by encouraging people to borrow and invest. It raises rates when it wants to cool down an overheated economy.
Housing market will feel the pinch
The impact of higher rates will be felt most directly on the housing market, as variable rate mortgages are closely tied to the central bank's rate.
Canada's housing market was red hot for most of the pandemic, as record low rates fuelled demand and pushed prices up to their highest levels ever. But that direction turned in the first part of this year, as the central bank's signal that higher rates were coming took the wind out of the sails of insatiable demand.
Average prices have fallen since March across the country, the Canadian Real Estate Association says. Wednesday's rate hike will do nothing to reverse that trend.
Thinking of Buying & Selling in this market? Bottom line is Your dream home will not be as expensive in this market however interest rates have risen so you will not be able to afford as large of a mortgage as you could have earlier this year. In the end this may not be an issue to you.
Contacting your Lender would be the first step in deciding how this will look for your unique situation. Secondly, meeting with a trusted local Realtor to evaluate your home's current market value. As pricing right and selling quickly is key to a successful transaction.
Please contact me for more information or a Customized Home Evaluation of your property.
