Ravi Punia - REALTOR®

Fraser Valley Specialist


Rising Interest Rates Predicted to Impact Home Prices

A good discussion on the impact of rising interest rates on housing prices in the video below.  In particular, the focus on variable rate mortgages rising, in lock-step with pending Bank of Canada increases, is interesting.  A greater proportion of new mortgages have been towards variable rates in the past year or so.  That is simply due to the significantly lower rate they've provided, compared to fixed-rate mortgages in recent time.

That may be about to change, with direct communications from central banks, that interest rates are set to rise this year.  High priced markets in the Fraser Valley, like Surrey, Langley and Abbotsford are likely to now be quite sensitive to rising rates.  That is because the sky high prices now require very large mortgages on the part of most new buyers.  Affordability will be further strained with higher borrowing costs.

As I've suggested before, buyers should probably assume that we are heading into a rising rate environment.  Stress tests on paper are much different than when the reality of higher payments actually take hold and bite monthly household cashflow.

See: The surge in interest rates will be a hit to housing

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