The Bank of Canada raised the overnight rate to 3.25% and that’s an increase of 75 basis points. So what does that mean to us?
First of all the Bank of Canada also said that they expect that they will continue to raise interest rates until they hit a target inflation of 2% which we’re not there yet. And the next announcement of rates is coming on October 26th.
For buyers, there are a couple of things. One is if you’re thinking that you’re for sure going to buy this year, talk to your lender and lock in a rate now because they’re not going to get better in the near future.
The other thing is to focus on your payment. We get caught up and we think that we’re buying a house. We’re not! We’re actually buying a payment. So work with your lender, look at your budget, and take into account that gas is more expensive. Everything is inflating right now. Figure out what you can reasonably afford for your mortgage payment and then work that backwards to what you can afford for a home.
For sellers, it just means there are going to be fewer qualified buyers on the market right now so it’s going to take a little bit longer to sell your home and you have to be realistic with price and understand that that peak market we had a few months ago is really over.
If you have any questions at all, contact us.
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