Everyone witnessed property values rise at a rapid pace throughout the fall and winter. With buyers facing high demand and insufficient supply we had seen a strong sellers market in the last two years. Aggressively, the Bank of Canada is setting out to correct the market.
After an increase in rates was announced back in April, there was a considerable 12.6% drop in home sales between March & April. The rate increase is now altering the qualifying rate for mortgage stress tests which is lessening the Buyers in the market that are stretching themselves a bit too thin and Buyers who are confident is getting a mortgage are seeing a reduction in the amount they are getting. The more expensive markets like Southern Ontario will be the most affected by the higher borrowing costs.
With inventory increasing throughout April and May the market has seen some balance compared to the hysteria over the last couple year. Hopefully, these interest rates will bring less price wars and a balanced market.
For a more in depth analysis: https://thoughtleadership.rbc.com/canadas-housing-market-taps-on-the-breaks-as-interest-rates-rise/