Mortgage Rate Hikes on the Horizon

rates_283As reported by the Canadian Press, home buyers and sellers should gear up for mortgage rate hikes sooner instead of later.

That’s because, while the Bank of Canada this week declined to change its current 1% overnight rate (which banks use to formulate their mortgage and other lending rates), it announced in a statement that the economic recovery, if it continues, will inevitably lead to hikes in the near future. 

"To the extent that the expansion continues and the current material excess supply in the economy is gradually absorbed,” the Bank of Canada noted in its statement, “some of the considerable monetary policy stimulus currently in place will be eventually withdrawn."

For those who have been closely following the Bank of Canada’s actions (or inactions) over the past few years, this news may not seem all that newsworthy. After all, the Bank’s Governor Mark Carney has been rather vocal over the last few months about how consumers should prepare for higher rates.

However, what makes this week’s statement different – and more impactful – is that the Bank has never actually officially signalled that it will eventually bump of interest rates. But that’s what it did, and so barring an unforeseen shock to the economy, it’s pretty much a foregone conclusion that sometime this year the Bank’s rate – and hence, mortgage rates – are on the way up. Some analysts are even predicting the increases to start as early as September.

If you’re planning on buying a home: the impending rate hike does give you an attractive financial incentive to put your home buying plan into action sooner, instead of later. Though the mortgage rate hike won’t be severe, even a difference of .50 basis points can mean tens of thousands of dollars in interest in the long run. I’m sure the buyers out there reading this can find better things to do with that cash then give it to the bank in interest!

If you’re planning on selling a home: this means a couple of things. For one, it means that per the point I raised above, there are going to be some pretty motivated buyers out there who want to “close the deal” before the rate hikes start coming. That gives you a good reason to put your home selling plan into action. Also, chances are you’ll need a new mortgage for your next home – and you’re obviously better off getting that in place prior to the hikes, too.

I’ll build your customized buying, selling or buying and selling plan – one that helps you get ahead of the mortgage rate hike curve. Call me at 780-709-0811. I’m here to help!  

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The Proctor Team are very knowledgable, professional and know the market very well. We took Chris on a 1.5 year journey to find the right home for our family within the few neighbourhoods we wanted to live in . He was patient with us and we never felt the pressure to buy something and always waited for us to give us our opinion on a house before he gave us his. He also checked in on us if he did not hear from us in awhile and always kept us in mind when new listings were about to hit the market. He also threw out other options for us to think about i.e. building our own, meeting with builders etc. At the end, we bought a house that had yet to hit the market (and also was not completely done) and had the kitchen he knew I had been looking for :). He helped negotiate what we felt was a fair price.

Through the home buying process, it was evident he has alot of knowledge on what does and does not add value to a home, but also on what things to look for in a new home when it comes to construction and other details. He and Patti also sold our house. It was a unique property which made it a challenge to sell in the current market but Chris held open houses and also had the house staged at no extra cost. The initial photos were done quickly and beautifully. We felt Chris worked hard for us and treated us with respect. We look forward to bumping into you in the neighbourhood!


- Bonnie Islam

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