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December 12, 2023
The recent decision by the Bank of Canada to maintain its key policy rate at five percent, a level this high not seen in 22 years, has significant implications for the real estate market. At ComFree Realty, we’re here to help you understand what this means for homeowners, buyers, and the overall housing market.
Steady Rates Bringing Relief For homeowners with mortgages tied to prime interest rates, the central bank’s decision to hold rates steady is a welcome development. As noted by Daniel Vyner of DV Capital, this stability may offer some relief, especially for those with variable rate mortgages or home equity lines of credit (HELOCs).
High Borrowing Costs Remain a Challenge However, the cost of borrowing remains high, and as Victor Tran from Ratesdotca points out, we are still in a period of elevated borrowing costs. This situation continues to exert pressure on household finances and the broader housing market.
Variable vs. Fixed-Rate Mortgages The choice between variable and fixed-rate mortgages has become more complex. With bond yields decreasing, the gap between fixed and variable rates is widening. This makes the decision more complex for both existing homeowners and new market entrants.
Potential for Interest Rate Cuts Looking ahead, potential interest rate cuts in 2024 could offer some relief. This possibility something borrowers should watch closely, as it could impact their overall mortgage strategy.
Muted Short-Term Impact Laird believes that the announcement will have a limited impact on the housing market in the immediate term due to the typical seasonal slowdown. However, anticipation of future rate cuts could invigorate the market in the new year.
Buyer Activity in 2024 Further rate rates in 2024 are predicted by financial experts, potentially in the second or third quarter and could activate sidelined buyers. This may lead to increased activity in the housing market once rates start to fall.
The situation for mortgage owners is dynamic and influenced by multiple factors. Staying informed about market developments is key. Flexibility in your mortgage strategy may be necessary as the market shifts.
Whether you are considering buying, selling, or refinancing, ComFree Realty is here to provide expert advice tailored to these changing economic conditions. Visit our Mortgage Services for more information or contact us directly for personalized guidance.
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These forms are provided to ComFree’s Unrepresented Sellers as a part of their Mere Posting ComFree Listing Contract and in partnership with Zubic Law.
I acknowledge I can only access these forms as a ComFree customer under contract.
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