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Home Affordability

Reality Check: Interest Rates Are Rising, Securing A Mortgage Now is Best for Buyers

Patti Cosgarea by Patti Cosgarea
April 22, 2022
in Affordability, Bank of Canada, Mortgage News, Mortgages
Reading Time: 3 mins read
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Last week, the Bank of Canada announced an increase in interest rates by 50 basis points. This is the second increase of the year but not expected to be the last. As interest rates rise, so does the stress test qualifying rate which is two percentage points higher than the actual rate of a mortgage. 

  • Read: March Housing Market Cooling Could Be a Good Signal For Home Buyers: CREA

What Does This Mean for Buyers Who Have Already Secured a Pre-Approval or are Planning to Do So?

  1. Pre-approvals are valid for four months, meaning if you secured a pre-approval at the end of 2021 or the beginning of this year, you could still buy a home this spring at your pre-approved, lower interest rate. Great news!
  1. Buyers that have thought about getting pre-approved but have not yet, should consider doing so now. As the interest rate is expected to continue to rise, it will become more difficult to secure a larger mortgage in the coming months. 
  1. For each percentage point the interest rate increases, Canadians will qualify for an approximately 10% smaller mortgage, but there is still time to get pre-approved before rates are increased again. 
  1. Calculate your potential mortgage pre-approval and monthly payments now using our mortgage calculator which features some of the lowest rates available across Canada.

Inventory is Increasing and Price Growth is Slowing Across Canada

Many are counting on the rising interest rates to be a major factor in cooling the housing market, causing downward pressure on home prices. We have seen some lower home prices month-over-month across many Canadian cities following the historic highs in February 2022.  As inventory is growing in many cities, analysts believe this could be leading to a more balanced market. 

  • Read: Home Price Dip in the GTA could signal Signs of Balanced Market for Spring 2022

If you’re considering buying a home this spring, contact us to talk to an agent and receive a free consultation. 

Considering Getting Into The Market This Spring?
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Patti Cosgarea

Patti Cosgarea

Patti Cosgarea is an accomplished public relations professional with a passion for digital communications and all things real estate. She dedicates her creative prowess to crafting compelling content that empowers and guides North Americans on their real estate journeys. With a keen eye for detail and a knack for storytelling, Patti ensures that Zoocasa's message resonates with its audience, whether it’s first-time home buyers or experienced investors, making complex real estate concepts accessible to all. Her love for real estate extends to her personal life. When she’s not analyzing Canadian and U.S. real estate data, you can find her wielding a hammer and paintbrush, renovating her townhouse in Kitchener. These DIY projects showcase her creativity and passion for design, learning as she goes to offer her insights to others working on transforming their house into a home. Patti’s real estate insights and articles have been published in BNN Bloomberg, CTV News, the Globe and Mail, and her interviews and quotes about current market conditions can be found on the National Post, Business in Vancouver, Global News and more.

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