Changing interest rates may cause uncertainty in Waterloo Region real estate market
The real estate market in Waterloo Region is finally starting to show signs of cooling down, according to local realtors, but a change in interest rates may change things.
On Wednesday, the Bank of Canada raised its key interest rate to one per cent, the highest rate increase since 2000.
“We raised our policy rate 50 basis points to one per cent and we indicated Canadians should expect further increases,” said Tiff Macklem, the Bank of Canada Governor.
Shawn Ramatour has been a realtor for ten years in the region with Royal LePage Wolle Realty. He says he noticed the market slightly slowing down about a month ago.
“I personally have listings that, if these were listed in February, things would’ve been a lot different for me, from the amount of showings that we see on properties, also the amount of offers were seeing," said Ramatour.
He says there's now more uncertainty and his clients are left worrying while facing more barriers to enter the market.
“Any first time homebuyers who basically don’t have an asset to sell or equity in a home and are banking on their down payment now, they’re going to have to qualify at a higher rate,” said Ramatour.
If interest rates keep going up, fixed rate mortgages are an option, but experts say doing that could come with its own set of concerns.
“Fixed rate certainly starts off at a significantly higher rate, but you know exactly what you’re going to be paying for five years," said James Laird, Co-Founder Of Ratehub.Ca and President Of Canwise Financial Mortgage Brokerage. "Variable rates start off a lot lower and has upside risk. Nine times out of 10 the variable is the cheaper one to go with."
Ramatour says most realtors and his clients are hoping for the same outcome, which is a more balanced market, so sellers are not the only ones reaping all the benefits.
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