As we round the corner into October, now is a great time to chat about what to expect in the marketplace this Fall!
As you may have heard, The Bank of Canada’s policy rate was 5% as of September. The recent rate hikes over the spring and summer have slowed the housing and mortgage markets as the rise in mortgage rates unsurprisingly spooked potential buyers. More recently, fixed-rate loans have become more expensive because of the increase in longer-term interest rates. As a result, housing affordability became a more significant hurdle and led to a slight decrease in home prices by 6% in major markets over the summer.
With The Bank of Canada currently maintaining the 5% policy rate, many hope this will be the peak in overnight rate changes. If so, homeowners and potential buyers will be granted some breathing room. We will find out more with their upcoming announcement on October 25th.
As we turn the corner into Fall and start looking ahead to the coming year, analysts forecast more robust housing markets. The expectation is that The Bank of Canada will gradually cut interest rates by mid-year, allowing potential buyers to navigate their affordability better.
As the housing supply shortage continues, new listings will likely rise and provide much-needed new inventory. As we move into 2024 and see interest rates decrease, motivated sellers will roll off the sidelines, and housing demand is expected to be resilient.
For anyone considering purchasing this season, getting pre-approved to guarantee your interest rate for 90-120 days while you shop the market is essential. This way, you will avoid being impacted by potential rate changes and can adequately estimate your budget for mortgage costs. Plus, pre-approval will indicate to the seller that you will be okay with obtaining financing (assuming nothing changes between now and the purchase with your job, savings, etc.), which is critical during the current economic landscape.
To help you make the best decision possible, download the My Mortgage Planner app to determine what you can afford and what your mortgage would look like at various interest rate levels.
I am also here to provide expert, unbiased advice to anyone with concerns questions, or want to get started on their pre-approval today!