7481 Woodbine Ave #203, Markham, ON L3R 2W1 (647) 806-8188
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The Bank of Canada’s decision to hold interest rates steady for a second time is likely to have a stabilizing effect on Canada’s mortgage market, according to experts. Leah Zlatkin, a mortgage broker and expert with LowestRates.ca, said the decision means “there’s likely to be a period of stability in the next little bit before things [interest rates] start coming down.” James Laird, co-CEO of Ratehub.ca and president of CanWise Mortgage Lender, said the decision will bring “stable mortgage rates and home values and allow more accurate forecasting for the remainder of the year.”
Zlatkin predicts that rates will begin to normalize in about two years, which she says will give people time to wait for lower interest rates. For those with a variable rate mortgage, they can “sort of rest easy knowing that things are going to be stable for a little bit,” she said. Zlatkin recommends a “head in the sand” strategy for those who can benefit from waiting a few years to lock in a lower interest rate. Laird suggests that people looking for a fixed-rate mortgage over the next few months should get pre-approved, which will protect them from any unexpected rate increases but still give them access to any lower rate available when they apply.
The decision to hold interest rates steady will also be good news for owners of variable-rate mortgages and those with a home equity line of credit, according to Laird. Fixed rates will be unaffected by the decision, Laird said, because “bond yields are steady, which means we should not expect any changes to fixed rates based on this morning’s announcement.”
The Bank of Canada’s decision is also expected to increase interest in the housing market, although Zlatkin doesn’t believe that prices will rise to the levels seen last year. “We’ve seen across Canada about an 18% drop in real estate prices over the last year,” she said. “But that really requires an increased supply of houses and an increased demand from people looking to go get houses. And if those two things line up properly, then yes, we can start to see those numbers creeping up.”
First-time homebuyers are often the “most skittish” during periods of volatility, Zlatkin said. However, the decision to hold interest rates for a second time will lead to more stable conditions and could spur demand. “The reality is that right now, many of those people who are looking for that stability and who do want to see things sort of level out are probably going to be hitting the market in droves,” she said.
The decision to hold interest rates steady will also be good news for owners of variable-rate mortgages and those with a home equity line of credit, according to Laird. Fixed rates will be unaffected by the decision, Laird said, because “bond yields are steady, which means we should not expect any changes to fixed rates based on this morning’s announcement.”
The Bank of Canada’s decision is also expected to increase interest in the housing market, although Zlatkin doesn’t believe that prices will rise to the levels seen last year. “We’ve seen across Canada about an 18% drop in real estate prices over the last year,” she said. “But that really requires an increased supply of houses and an increased demand from people looking to go get houses. And if those two things line up properly, then yes, we can start to see those numbers creeping up.”
First-time homebuyers are often the “most skittish” during periods of volatility, Zlatkin said. However, the decision to hold interest rates for a second time will lead to more stable conditions and could spur demand. “The reality is that right now, many of those people who are looking for that stability and who do want to see things sort of level out are probably going to be hitting the market in droves,” she said.
7481 Woodbine Ave #203, Markham, ON L3R 2W1 (647) 806-8188