Langstaff Gateway Condos price list. What does raising interest rates mean for the housing market? Canadians are keen to buy cheap debt in large quantities, leading to a surge in floating-rate loans. Many people believed that the Bank of Canada would raise interest rates at 01:30, but now it looks certain that the rate rise will accelerate, and experts expect it to rise in March next year.Please Visit: Langstaff Gateway Condos price list to Get Your VVIP Registration Today!
Interest rate is the barometer of the real estate market. In many countries, raising interest rates is considered to be one of the best market-oriented means to regulate the supply and demand of real estate.
In Ontario, home purchases for investment accounted for 1/4 of all home purchases in August, the highest in nearly a decade, making current real estate investment riskier, according to Teranet. In the second quarter of this year, the number of people with three or more mortgages increased by 7.7% over the same period last year, double the figure before the outbreak, according to Equifax.
Many investors have taken advantage of falling interest rates on floating mortgages to make loans that have boosted the Canadian real estate market. But the central bank’s warning to raise interest rates in advance is likely to ease the trend.
On the other hand, many home buyers have to consider the repayment burden increased by raising interest rates. In response, Reuters believes that investors who own multiple properties may sell some properties to reduce the repayment burden.
“Investor demand is fickle,” said Philip Cross, a senior researcher at the Macdonald-Laurier Institute. “once investors start to see interest rates rise or house prices fall, they will think that real estate investment is unprofitable, and this source of demand may soon disappear.”
The surge in investor interest has led to an increase in lending to existing properties, and the volume of new revolving credit lines (Home Equity of Credit,HELOC) secured by home ownership increased by 57% in the second quarter of this year compared with the same period last year, a worrying trend, according to Equifax of Canada.
In response, John Pasalis, president of Brokerage and Research Realosophy Realty, said that for investors with floating-rate mortgages, “higher interest rates will erode cash flow” and “we may see some investors start to sell properties.”