It seems that the pathway for interest rates in Canada is clearly up. That is what the Governor of the Bank of Canada stated in prepared remarks.
And so mortgage rates are seemingly set to go up in 2022 and maybe beyond. As I stated yesterday, the 0.25% increase the Bank of Canada made yesterday to it's key lending rate is unlikely to impact Fraser Valley real estate, in any meaningful way.
But, in time, if rates do trend upwards a fair amount, then the sensitivity to higher rates might be quite high. That is because of the mortgage debt underlying the sharp increase in prices over the past couple of years. Higher payment amounts on large principal balances can quickly strain household cash flow.
For now, I don't foresee the still very cheap mortgage rates slowing down the hot markets like North Delta, Surrey, Langley, Abbotsford or Mission. In fact, we might see a surge of buying by buyers who want to act on their still low locked-in pre-approved mortgage rates. These house hunters may be looking to pull forward their purchases into the early spring, before rates rise more.