Canadian Mortgage Rates May Be Rising, But Don’t Panic! Here’s Why.

Yes, Canadian mortgage rates are on the rise. But, should you panic? The short answer is no.

You may be feeling the dynamics of the housing market shifting, and this is true regardless of whether you are a first-time homebuyer, an existing homeowner or an investor.

Those interested in purchasing a home may have felt some relief in recent months as home prices have levelled, but buyers face challenging stress requirements with the rise of Bank of Canada’s key rates.?

The current mortgage stress test requires borrowers to prove they can handle either a rate of 5.25% or their contract rate plus 2%. With variable rates above 4%, many buyers must show they can qualify for a mortgage at over 6%, or higher, rather than 5.25%.

Here’s what to consider:

1. You may not pay a lot more, just because rates are higher

House prices are a reflection of the market and you’re very likely pay less now than if you bought in the peak of late 2021 and early 2022, and maybe even less come early 2023. According to a new report from TD Bank, the average Canadian home price could drop by 20-25% from its peak this year to the first quarter of 2023.?

This means that the difference in rate for the term of your mortgage may not be a loss when compared to what you may have paid for that home at the peak of the madness.

Remember, these rates are for the term you choose and not the life of your entire mortgage. We have been looking into more 2 and 3-year terms at renewal as clients wait out the volatility of the recent market.

2. Homeownership is a long-term game

The real estate market, and most investments as a whole, are a long-term play, and as such, fluctuations on both ends of the spectrum in the short term do not mean that you should not expect to see a general upward trend in terms of home value in the long term. This is true regardless of what is happening in the immediate markets.

Experts continue to be optimistic about the future of the housing market because population growth should continue to be healthy, which will support the fundamental demand for housing. 10 years from now, today’s rate fluctuations will be old news and your equity will surprise you.?

3. Competition means more options and better rates

It’s more important than ever to shop around for the most competitive rates and the mortgage product that is right for you.

With just one application and credit pull, mortgage brokers, like me, can access dozens of lenders and product options from across the country. Your bank can’t do that!? When lenders compete for your business, you save on interest.

The best part is, for the average mortgage transaction, there is no cost to the applicant to use the services of the broker. The lenders pay us and so our only goal is to find you the best options and most competitive rates unique to your scenario.

In the market? Start planning

The Mortgages With Sue Mortgage Planning app can help you learn, plan the next steps and even get an idea of what you may prequalify for. The best part? Our industry-leading mortgage technology means we can do it virtually!

Grab the Mortgage With Sue Mortgage Planning App? →? mortgageswithsue.com/app

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