Interest rates are rising – what does it mean?

Published By: on July 17th, 2017 in Category Nanaimo Real Estate
Published By: on July 17th, 2017 in Category Nanaimo Real Estate

Written on July 17, 2017

As many of you know, the Bank of Canada raised its interest rates on Wednesday, for the first time in seven years. Rates went up ¼% – not a drastic rise, but certainly a sign of change. Experts expect more gradual increases in the coming months, with mortgage rates stabilizing again at around 3-4%.

This is good news for investors and bad news for buyers. It is important to keep these increased rates in perspective. 3-4% is still a historically low rate. No one is forecasting a return to the 18-20% rates of the past.

The rate change is due to the strengthening Canadian economy and concerns about increasing consumer debt. Last fall the banks brought in a tougher stress test for mortgage qualification. In order to qualify for a mortgage at 2.4% interest, you had to qualify for at 4.8%. This measure was to insure that borrowers would be able to make their payments should rates increase.

HERE’S WHAT IT MEANS:

  • If you have a fixed mortgage, your interest rate will remain the same until it is time to renew your mortgage.
  • If you have a variable mortgage or a home equity loan, your rates will go up, and your payments will be increased.
  • Expect another increase in the stress test.
  • Expect several more small increases.
  • If you are thinking of buying a home – now’s the time. Lock in the current rates for your mortgage but also make sure that you do not over extend yourself. You’ll need to leave room to absorb slightly higher monthly payments.
  • If you are thinking of selling a home – now’s the time. There will be a flurry of buyers trying to lock in the lower rates before more increases come. More Buyers = a stronger Seller’s Market and rising prices.

If you have questions about how these changes affect your situation, let’s talk.  Call Love Real Estate Group with RE/MAX of Nanaimo at 250-802-9810

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We had been planning a move from Calgary to Nanaimo for retirement purposes for a few years. Upon discovering Love Real Estate Group a relationship began. Over a period of time, with patience, professionalism, good humour and integrity, Love Real Estate Group helped us secure a home that met our needs and our wishes. We are happy to recommend Love Real Estate Group to anyone looking to buy a property in the Nanaimo area.

Diane and Tom Crawford

When I decided to sell my home in Cedar by the Sea last April, I asked Love Real Estate Group to list it. Within a week, I had offers and a purchaser. Next, Love Real Estate Group showed me a number of potential residences that could meet my needs. Within three weeks, I was very interested in buying a townhouse, made an offer and it was accepted. I was very impressed with Love Real Estate Group’s manner in which they dealt with me. Their advice, professionalism and prompt service were especially appreciated. I would highly recommend these Ladies to others if they are seeking either to sell or buy a home. Thanks again Love Real Estate Group.

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