Market Update: Interest Increases From The Bank of Canada

The housing market continues to be a hot topic not just locally here in the Greater Windsor Area, but all across Canada. Many are asking what will the government do to help the buyers. Locally, here and the Windsor real estate market, buyers know how quickly you have to act when you find the right Windsor home for sale. If you don’t it is back to the internet searches for houses for sale in Windsor, Ontario and having your Windsor real estate agent sending you possible options. One thing you can do to help you act quick is to have your mortgage pre-approval lined up and ready to go at offer time. One factor in said pre-approval is the interest rates. This post will discuss the Bank of Canada’s Key Rate.

Banks at all levels are looking to manage record inflation. One such way to do so traditionally is to raise interest rates. Inflation hit 5.1% this past January, a record high since 1991. That is why it was no shock that just two weeks ago the BoC decided to raise its Key Rate from 0.25% to 0.5%. This represented the first Key Rate increase in Canada since October of 2018.

Coming out of the COVID-19 pandemic, our economy has been on the rebound and employment is estimated to be back at pre-pandemic levels. With prices rising in nearly 80% of the 48 subcategories of Canada’s Consumer Price Index the BoC decided to move-up its schedule for a rate increase. David Dodge, the former head of the Bank of Canada predicts that inflation will gradually come down from “multi-decade highs” and he expects the rate to rise by 1% to, at minimum, 1.25%. Financial markets have predicted the rate climbing to 1.75%.

So what does all this mean for a home buyer? Increased rates mean less buying power. If you plan to be active in the market in the immediate or near future, meet your mortgage broker and get your pre-approval. With each increase in the Key Rate, the less buying power you’ll have.

Here at Jump Realty our agents will give you honest advice on what course of action is best for you in their professional opinion and will always put taking care of your best interests first! With offices in Windsor, Tecumseh, Kingsville, LaSalle, and Chatham, no matter where you are, a Jump agent is ready to help. Please contact us for any housing needs and let us give you a better real estate experience!