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Real Estate News: Impacts of an Interest Rate Increase

By August 9, 2017No Comments

A few weeks ago, the Bank of Canada announced the interest rate was finally going up – from 0.5% to 0.75%. Many of us have been anticipating such an announcement for months, so this really should not have come as a surprise to anyone. As a real estate professional, this news has led to the question of what the impacts of an interest rate increase may be.

While it is as yet unclear – indeed not enough time has passed to accurately gauge the ways in which a higher interest rate will impact the housing market – there has been some speculation.

According to a Business News Network release from just days before the interest rate announcement wherein some analysts shared their predictions, such a rate hike (25 basis points) shouldn’t have much of an impact on the real estate market. However, as one analyst noted, “one-point higher rates would noticeably drive up real estate listings and further slow sales, especially if OSFI’s new stress test passes and takes more buyers out of the market.”

That being said, as another analyst pointed out, “if we look south of the border, the U.S. has seen three rate increases totaling 75 basis points since December 2016 and demand for homes still appears to be strong.”

You can read more on these predictions here:

For more on the interest rate hike itself, check out Teranet’s Commercial Solutions’ blog here:

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