How can you get your home, and yourself, ready for selling in 2025? Here are five ways to start preparing before we hit the new year.
How do Bank of Canada rate hikes affect you?
How do Bank of Canada rate hikes affect you and the housing market? As you know, the bank increased the target for the overnight rate to 0.50 per cent at its last meeting in March, the first increase in almost two years. Approaching the next meeting on April 13th, you might be wondering what’s to come and what you should expect.
Here’s some more information to help you shape your future financial decisions.
Rate hikes and household budgets
Interest rate hikes mean borrowing is more expensive for all Canadians. For Canadians who are dealing with debt, this might seem a bit nerve-wracking, but there are ways to deal with these increases. We recommend forming a plan to pay off high-interest debts first, to limit the interest you will owe over time. This way, rate hikes will have less of an impact on you. You can also think about consolidating your debt into a lump sum payment. These often have lower interest rates, so you can handle your debt with a lower rate.
If you’re thinking about renovating your home, it might be a good idea to hold off on these plans for now. Once supply catches up with demand over time, we may see prices of materials decrease. This could help save you money on your household budget.
For home owners and buyers
For home owners, the Bank of Canada rate hikes have the biggest impact on variable rate mortgage holders. With each rate increase, the prime rate rises and your mortgage payments will rise accordingly. If we see another increase next week, your payments will rise once again. With that in mind, rate hikes are still small enough that increases to payments should be minimal. Home owners are positioned to weather the increases, having gone through mortgage stress tests to ensure they can carry a higher mortgage rate.
Buyers will continue to experience challenges in the housing market. Although rates are now on the rise, they are still very low and will not curb demand or housing prices for some time. However, more hikes are expected over the next two years, which could help cool the market by alleviating some demand.
What will happen next week?
The next Bank of Canada announcement is on April 13th. We are likely to see another rate increase as the bank continues its plans to bring rates back up. If you have any questions about how Bank of Canada rate hikes might affect you, you should get in touch with a broker. We can help you understand your options and what your best move is going forward.
If you need to discuss your mortgage, get in touch with us at Clinton Wilkins Mortgage Team! You can contact us at 902 482-2770 or contact us here.