Ravi Punia - REALTOR®

Fraser Valley Specialist


Interest Rates Set to Rise in 2022

Like all housing markets across Canada, the Fraser Valley housing market will feel an impact from rising interest rates in 2022.  If and when the Bank of Canada (BOC) begins it's interest rate tightening cycle, mortgage rates will be going up.

Today, the BOC kept their overnight lending rate at 0.25%.  This is the benchmark interest rate that affects the prime rate and in turn variable rate mortgages.  The Bank of Canada did, however, make it clear that they will begin on a pathway of increasing interest rates in early 2022 and beyond.  This means they will be raising the key interest rate several times in 2022, and perhaps beyond, into 2023.  They have to do so to control inflation, which is running high at multi-decade high levels.

This may arguably be the absolute best time to be a seller of real estate in the Fraser Valley.  Conditions seem to be favouring sellers in a way like no other.  Red hot demand, combined with still cheap borrowing rates, and a lack of homes for sale, is firmly giving sellers the upper hand in transactions.  But, this may gradually cease, as borrowing costs go up, and assuming that active listings increase to meet demand at some point.

For buyers, I have great empathy.  This is an incredibly challenging time to be a first-time buyer, in particular.  Even move-up buyers looking for more space are in a tough spot.  But buyers do find solace in the fact that markets move in cycles.  Sellers markets don't last forever.  In time, there will be a more balanced market and perhaps even a buyer's market, sooner than you know.  Take a deep breath and be patient buyers.  Rising mortgage rates are not necessarily a bad thing, considering that they may help cool frenzied activity and bring some semblance of 'normal' back into the market.

I suspect that 2022 is shaping up to be a transitional time in the real estate market.  The days of ultra-cheap, record low borrowing costs, will likely be well behind us, as the year progresses.  This will lead to changes in the market dynamics.  There may be a lag or delayed effect from higher borrowing costs, but change appears to be coming.

See this article from Yahoo Finance below, for a summary of today's news.

"Bank of Canada holds benchmark interest rate"

*This blog communication is not intended to cause or induce breach of an existing agency agreement.  Views are my own and do not reflect those of any organizations that I may be associated with.

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