Mortgage rate hike good for business?

by Jamie Henry10 Dec 2014
The prediction of a rate hike in 2015 is likely to push first-time homebuyers into the market, according to a new report, as Millennial buyers aim to secure a low rate before the Bank of Canada ends its one per cent run.
The annual Housing Market Outlook released by Re/Max this morning forecasts an increase to mortgage rates as early as May 2015. The Bank of Canada already hinted at a rise in the new year, though it didn’t specify when.
That’s good news for agents who are likely to benefit from a surge of buyers looking to lock in at the lowest rate possible.
Those buyers – many of them first-time Millennial buyers – will be looking at condo purchases in expensive markets like Toronto and Vancouver, the report said, pointing to data from 2014.
Condo developments were, and will continue to be, a practical choice both for first-time home buyers and for baby boomers looking to downsize in suburban regions, such as Montreal, Victoria and Burlington.
Still, as construction continues in several of Canada’s markets, rising inventory is not expected to stifle home prices in 2015 – just as it didn’t in 2014.
Re/Max instead expects 2015 sale prices to rise by three per cent in Vancouver and Calgary, four per cent in Toronto and Edmonton, and six per cent in Moncton, driven largely by continued low interest rates, strong GDP growth – the Bank of Canada projects the country’s GDP to rise by 2.5 per cent in 2015 – and an influx of some 285,000 permanent residents.
“Canada’s housing market is mirroring the resilience of our economy,” said Gurinder Sandhu, the regional director of Re/Max Integra Ontario-Atlantic. “Housing demand is being supported by steady employment and immigration, while our GDP is expected to grow another 2.5 per cent in 2015. This is mitigating the effects of higher inventory, which many markets have been experiencing due to increased development.”


  • by Eddie 12/10/2014 2:59:18 PM

    The millennials might rush into the market if they sense an imminent increase in rates coming but that doesn't mean that the inventory will increase. In fact, with the current high prices are preventing property owners from selling to move into larger or newer properties. They prefer to stay put and renovate. Therefore, if anything inventories will be depleted and prices will rise, followed by inability of millennials and new comers from buying. I think the ReMax crystal ball is a little murky with wishful thinking. The

  • by 12/10/2014 4:06:21 PM

    I do not know how the real estate market would be more active with first time buyers if Mortgage Interest Rates go up next year. In my own point of view, the lack of inventory and therefore the high price of Real Estate, as the tremendous difficulties to obtain mortgages due to the extreme and so many demands from financial institutions, will stall if not stop the existing inventory turn over, which actually will probably have a "flat growth" as well as prices won't go up as we have been experiencing for the last 10 years.

  • by Simple Stuff 12/11/2014 2:20:20 PM

    All nonsense. Only one reality. All that money that has been printed over the last many months will raise the price of everything (not real estate, that is already way up as result). And, at the same time, the Chinese will be then tired of their money earning so little. You know what that means? Interest rates will go back to where they are supposed to be (based on decades of reality) or worse. And you know what all you people continue to hide (or simply don't understand)? The best time to buy real estate is when rates are high. The higher the better because that is when, hello, the price of real estate is at the low end of the cycle.

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