The Bank of Canada has hiked interest rates to 0.5 percent.
Ottawa Valley mortgage agent, Mike Hammond, with Mortgage Intelligence, says rates won’t change for those already locked into fixed rate mortgages, but you could see an impact at the time of renewal. Hammond says the rising interest rates will make housing more expensive for those with variable rate mortgages or loans.
He says now is the time to crunch the numbers to see if locking in makes sense. Hammond adds if you’re thinking of buying a home, doing renovations or want to consolidate debt by refinancing your mortgage, you should consider locking in funding before it becomes more expensive.
He says they’re already seeing a surge in pre-approvals adding with inflation and the cost of living continuing to rise, it might make sense to consolidate your consumer debt with a mortgage refinance.
The local mortgage agent expects interest rates to continue to rise. He says last week, the Bank of Canada raised overnight lending rates by 25 basis points to half a percent, marking the first time the central bank has tightened its monetary policy since 2018.
Hammond says economists expect the central bank to hike rates five more times bringing the benchmark rate to 1.75 percent by the end of the year.
While Hammond expects rising interest rates to take out a few buyers, he doesn’t think it will cool off the local real estate market overnight, adding there’s not many homes on the market and demand is still strong.
The Renfrew County Real Estate Board says January, 2022, saw the lowest number of active listings added in the month in more than three decades, while the cost of housing in the Ottawa Valley remains at an all time high.
Hammond says if your mortgage broker determines you can afford it, you should buy the house.
He says at the end of the day, real estate is still a great investment.
The Bank of Canada says the next scheduled date for announcing the overnight rate target is April 13th, 2022.
If you have questions or concerns about rising interest rates and how it will impact you, contact your local morgage advisor.
Mike Hammond is a mortgage agent with Mortgage Intelligence and can be reached by email michael.hammond@migroup.ca or phone at 613-732-1198.
(written by: Rudy Kadlec)