The Bank of Canada raised the key interest rate to 1.25%, the highest since 2009. This decision wasn’t a surprise to many in the banking industry, but some are divided on whether this will be the only rate hike of the year or if this is the first of what could be a couple more rate hikes to come in 2018. As we commonly say in the Real Estate industry when asked about things that might happen in the future, “I wish I had a crystal ball”, and this saying rings true with interest rates.
This doesn’t mean its time to panic
In the grand scheme of things interest rates are still VERY low, and probably lower than they should be. The reason for the rate hike, according to Stephen Poloz is our economy was running on all cylinders in 2017. There are many factors on the horizon that would affect rate hikes in 2018, most notably the uncertainty around NAFTA and how any negotiations might impact Canada. For this we will have to wait and see but the consensus is that we will still have a strong economy for 2018, although there are some things that could swing the economy in one of two directions.
What this means for housing…
Now we are back to that crystal ball thing again, haha.
For Buyers, things are still good, rates are low and the crazy bidding war market is behind us. This makes for a perfect time to either get in to the market, move up or downsize. Nobody knows where home prices will go from here, but in my opinion they won’t be going down.
For Sellers, because rates are low it means it will encourage buyers to get into the market and pull the trigger on buying a home.