The world has changed a lot over the past few years, and national economies are feeling the impact.
With inflation surging across North America and Europe, markets and banks are responding as best they can. In Ottawa, the Bank of Canada has increased interest rates in a bid to tamper inflation down.
Let’s check out how this is affecting mortgage rates across the country.
Supply Must Catch Up
According to the Bank of Canada, inflation peaked in June at 8.1% and has declined in the two months since. While that’s welcome, inflation isn’t fading away on its own.
That’s why the government is slowing the spending economy by raising interest rates, so supply can catch up with demand.
Housing Across the Country
While each market is different, in general, demand for housing badly outpaces supply. This is truer in some neighbourhoods than others, but it describes the macro situation pretty accurately.
The Bank of Canada’s interest rates usually dictates how commercial banks and other financial institutions respond. Accordingly, some mortgage agents say consumers should expect most variable rates to hit a range of 3.35-4%.
For context, one licensed mortgage broker said a variable mortgage rate would be $55 more expensive monthly for every $100,000 someone holds. In May 2020, the Canadian Real Estate Association said the average home price was $711,000 — a variable rate of 2.7 would result in monthly payments of $2.845.
With an interest rate of 3.7%, this same mortgage would cost $3,168 per month, an increase of over $300. Those with variable mortgage rates need to look out, as do those whose mortgage is up for renewal.
Housing Costs Dropping in Cities
After years of constant growth, the cost of real estate in major cities like Toronto appears to be cooling. Homes that sold for more than asking after a bidding war are not guaranteed to sell at all, and if they do, it may be for less, depending on the neighbourhood.
No two homebuyers have the same considerations when preparing their finances, and having an appropriate real estate agent can really help. To find the right agent for you, many homebuyers use Nobul, a real estate technology platform designed by digital innovator Regan McGee. to quickly connect buyers and sellers with the most suitable representation.
Homebuyers using Nobul can securely streamline the real estate buying process while saving money, too. Whether you’re looking for a starter home or a Bridal Path mansion with a fixed or variable rate, you’ll be glad to pay less and enjoy an easier process.
It’s impossible to read tomorrow’s headlines today. Nobody knows for certain what future world events may impact interest rates, inflation, and mortgage rates. The best thing homebuyers can do, aside from making as much money as possible, is connect with an experienced real estate professional who can give specific mortgage advice for them.
