The benchmark interest rate set by the Bank of Canada has had it’s largest one-time increase in more than 22 years. This is impacting the rate Canadians with mortgages and line of credits are receiving from their lenders, those with a variable rate will see changes almost immediately.
Economists were expecting a significant increase, even after the bank had increased the interest rate 4 times since March, however a full percentage increase shocked many and it is expected that the rate will increase even more to combat high inflation.
Property prices propelled to an ultimate high in the housing market all over Canada and especially here in Southern Ontario as a result incredible low interest rates throughout the past couple years, this interest rate hike with definitely effect the housing market.
Changes consumers can expect to see are soon-to-be buyers who have yet to purchase will likely get stress tested at a much higher rate to ensure they are capable of carrying a higher mortgage rate, offers on properties will most likely be conditional on financing and home inspection rather than a firm deal, there is also the potential that buyers who purchased back in early 2022 may not being able to close on their property. This could result in litigation and the reality of losing deposits.