Mortgage rate hike good for business?
The prediction of a rate hike in 2015 is likely to push first-time home buyers 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.”