The latest Bank of Canada interest rate hike will add to the financial burden of some variable mortgage holders and those renewing fixed rate loans this year.
in the GTA, say real estate experts.
May was the fourth consecutive month in which the average selling price of a home rose in the region, up to nearly $1.2 million, only 1.2 per cent behind the same month last year. Royal LePage CEO Phil Soper expects his company will hike its year-end price forecast upward for a second time this year, despite higher mortgage rates. The price correction triggered by last March’s rising rates, was over at the end of the first quarter of this year, he said.
Interest rates, he added, will gradually put upward pressure on rents as landlords renew their mortgages or purchase new property. “The listings are increasing now and if sales actually decrease as a result of this rate hike, the market will move back into a more balanced place where sellers aren’t necessarily in the driver’s seat all the time but buyers aren’t either.”
For those with fixed rate loans renewing this year, Wednesday’s interest rate increase “is a real blow,” because, after falling March through May, those rates have been rising again and the central bank’s announcement means all chances of rate cuts this year have vanished, he said.
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