New Interest Rates and Real Estate For Sale in Penticton
For those who have been keeping up with current events in Canada, it should come as no surprise that the Bank of Canada has increased its key interest rates. Many individuals will quickly start to see the effects of this in the weeks to come. Particularly, people involved with real estate or looking to purchase real estate will begin to notice changes over the next quarter. Anyone who is the owner of real estate for sale in Penticton or is looking to buy a property in this area should be wary of the impact of new interest rates. For more information on this subject, continue reading below!
All About the Bank of Canada’s New Key Interest Rate:
On Wednesday, March 2nd, 2022, the Bank of Canada increased the key interest rate by 0.5%. This rate has not been touched since the beginning of the pandemic when the Bank of Canada cut the starting rate to near-zero. Prior to COVID-19, the Bank’s rate was 1.75%. The changes in rate will affect consumers with mortgages, lines of credit, and savings accounts at their own banks.
Lenders have responded quickly to the bank’s announcement, following suit with their own rate adjustments. According to a CBC article, the Royal Bank and TD have already raised their prime lending rates to 2.7% from 2.45%. Which means costs could start to add up fast.
The Bank of Canada’s plan to hike its rate was no secret to Canadians. Inflation is growing at a rapid rate. In order to combat this, there are rumoured to be several small interest rate hikes throughout 2022.
Economies across the globe are bouncing back from new COVID-19 variants, like the Omnicron variant, faster than predicted. According to Statistics Canada, the Canadian economy grew at an annual rate of 6.7 percent over the last three months of 2021. This is a major factor in the bank’s decision to increase the key lending rate. Furthermore, the recent outbreak of war in Ukraine is yet an additional reason for inflation to continue to rise. Especially for resources like oil, natural gas, and fertilizer. All of which has caused new problems to arise in the global supply chain. Thus, also contributing to the bank’s decision.
Impact on Real Estate For Sale in Penticton:
The impact of the Bank of Canada’s new interest rate is likely to only have an impact on housing demand. However, even then, the changes will not be very drastic. In order to balance out the real estate market, new inventory is a must. The housing shortage is a root cause of the current extremes in the real estate market. Without more homes being sold or built, or a huge downward spike in demand, the market situation is unlikely to change.
The provincial government in British Columbia has proposed a cooling-off period in an attempt to restore affordability and inventory. The plan entails allowing buyers to be able to back out of a sale within in specific time period without any penalty. Many real estate experts don’t see this as a plausible solution to the housing crisis. Their worry is that a cooling-off period could only worsen the situation, causing uncertainty for sellers and promoting buyers to make more frivolous offers.
As a counter to this proposition, the Association of Interior REALTORS® suggests a five-day pre-sale period. This means that nobody could make an offer on a property until five days after it has been listed. Doing so would allow buyers to take time to make an informed decision and have routine inspections done prior to the purchase. Thus, hopefully ensuring the security of both the buyer and the seller.
Real estate prices have been sky-high across Canada since the end of 2021. And, it seems as though prices are only getting higher with the effects of COVID-19 still lingering on. The question of how to reset the housing market remains a hot topic for most Canadians.
Contact Us For More Info on Real Estate for Sale in Penticton!
With the change in interest rates and various proposals to restore the real estate market, buying and selling real estate for sale in Penticton can come across as confusing. Understanding how the new interest rates will affect your mortgage payment is especially important in staying on top of your real estate goals.
For more information on any of the previously mentioned topics, contact us today. We’d be happy to help clarify any questions you may have regarding real estate for sale in Penticton. Our team of expert real estate agents can also put you in touch with a number of helpful resources to ensure you stay on top of the latest economic changes. Feel free to reach out with any concerns or inquiries you may have. We look forward to working with you in the near future.