Canadians and their wallets have had a tough year in 2022 and recent data shows that there may not be an end to this soon. The Bank of Canada has again raised its key interest rate to try to bring it inflation under control. The latest hike of 0.5% was the banks seventh increase of 2022. These increases affect those with variable rate mortgages. 

If the current economic times have you feeling down and thinking that now is the wrong time to purchase a new home, think again. The high interest rate environment can have some possible benefits for those looking to buy, which can be a bit of a silver lining even, if you need to get a mortgage. Here are some reasons why you may not want to delay your plans to buy a house. 

Rate increases may be tapering

The Bank of Canada’s message after their latest rate announcement has changed from ‘rates will need to rise further’, to ‘considering whether the policy interest rate needs to rise further’. There are positive signs in terms of inflation which could translate to lower rates in the medium term. With September's inflation numbers slightly lower due to lower fuel prices, this may be passed onto other goods with lower prices. A sharp decline in inflation is expected by the bank of Canada next year, which will help them reduce their monetary policy tightening.

For those looking for a short-term fixed rate mortgage, or a variable rate mortgage, this is good news. Although your interest payments may be higher in the short term, the medium term may help reduce your mortgage payment with falling inflation. With this, it may not be worth passing up your dream home at this time.  

Falling home prices 

With a mortgage, your interest payment will be higher with higher interest rates. However, if home prices fall as demand decreases due to rising interest rates, this may mean catching a deal in the market now. The average home price in Canada in October 2022, down 9.9% from the same month last year according to The Canadian Real Estate Association (CREA). This can mean big savings in your pocket if buying now versus a year ago. 

Lower home prices may translate to a lower mortgage and with that, a lower mortgage payment or reduced amortization. 

A mortgage broker can give you options

When interest rates are high, shopping around is more important than ever. A mortgage broker can help make the shopping around process easy. Mortgage brokers have access to hundreds of products amongst dozens of lenders and are there to assure you get the best options. As interest rates are projected to fall over the next few years, I can help design a solution for you, so that you are in a better position to benefit from this. Whether you're ready to by now or just looking to plan the road ahead, I invite you to reach out.

Andrew Thake 

Mortgage Broker

613-699-2006
www.andrewthake.com
andrew@andrewthake.com
LIC M10002605
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