Megann  Willson

Megann Willson


HomeLife/Realty One Ltd., Brokerage

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Interest Rates Held Firm - What Does That Mean for You?

Yesterday’s interest rate announcement from the Bank of Canada, held the rate steady at 5%. What lenders will actually charge you in interest, may vary, depending on your financial situation and your ratios (discussed in the previous post). I frequently hear from buyers that they’re shocked by the interest rate level, because they, their cousin, their sibling, or their best friend, purchased only a couple of years ago at a much lower rate. That’s probably true. Those people may well have also purchased at a lower price.

Here's the thing I try to remind all my buyer clients: interest rates will go up and down over the course time. That includes whatever period you own your home. Assuming I believed in the concept of “forever homes” (which I don’t, and we can discuss that in person, if you’re thinking of becoming my client), I would also hope that you had a plan to pay off your loan in a total of 25 years, or less. So what have interest rates looked like for people who bought that long ago?

What you can see, thanks to this handy graphic from WOWA, is that the 1999 buyers were faced with rates just about the same as what we are seeing today. And then in between, a lot of rates went lower. On the other hand, if you had bought in 1973, rates would have gone up, and up, and up. What does all this mean? It means, you should always be prepared for volatility. It also means, that regardless of which of those buyers you were, if you held on to your house for 25 years, the value most assuredly went up. 

The rate is never (and never will be) the entire story. Solid neighbourhoods, with great schools, wonderful parks or amenities, and access to the things you want and need as a person, or as a family, will always keep rising in value. Temporary pricing shifts are just that. Temporary. 

Are you interested in understanding the market with someone who has over 40 years of home ownership experience? Let's talk. I'm happy to answer your questions. 

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