Author: Sabrina Rosa

 

As the market heats up, we also see a rise in interest rates. It is important for people to understand and learn more about the rise and decline of mortgage rates in the housing market, particularly with purchasing decisions. A rise in interest rates make it difficult to sell or buy a home, however a decline in interest rates does the opposite, and makes it easier. The economy is the main factor that contributes to the interest rates, however there are other factors as well.

 

            Canada continues to see a rise in interest rates alongside the housing market. According to a recent report in October, the average house price in Canada was $644,643 –10% lower than it was the year before. This year, the Bank of Canada has raised interest rates faster than usual. Currently, the rate in Toronto has been raised to 3.75%. This is the 6th time it has been raised this year. BC has also seen a hike of 3.25 to 3.75%, which has worried many homeowners and renters. This rate is the highest it’s been so far in Toronto and Vancouver.

 

So, what does this interest rate hike mean for homeowners today? Rising interest rates have been affecting mortgages considerably. At least 25% of people who own homes in Canada have considered selling their homes if the hike continues.  Homeowners are looking to either sell their homes as they can no longer afford it, or refinance. Many are also having difficulty affording maintenance for their home as well. For people who can keep their homes, they will have to try to save in other ways, such as lessening non-essentials and cut down their essential spending.

 

With the rise in mortgage rates, effects are not exclusive to homeowners.  As mortgages become more expensive, and people are less likely to qualify, an increase in rental properties occurs. With the costs going up, the rent will rise, which will be an issue for current renters. If you are a landlord on the other hand, depending on the circumstances, rental spaces may be more lucrative. However, the costs may increase as well.

 

Talk to a professional before making decisions about your mortgages and finances. Working with an expert, allows future investors to have more knowledge on what they can expect, and feel more protected with their financial decisions. If you need help finding a financial advisor, e-mail our office at info@legaldirect.ca of call us at 905 787 2296.