July 2017 - Changing interest rates overview

Dear friends,

Changing interest rates are a fact of life, and you're probably wondering what the Bank's of Canada's recent decision to hike borrowing rates 0.25% to 0.75% (after years of being at a record low of 0.5%) will mean for the real estate market, for homeowners, and prospective homeowners.

Let's talk about it!

If you're a homeowner who opted for a fixed rate mortgage, you won't notice the difference with the new mortgage rates until your mortgage is up for renewal; if you have a variable mortgage you will see the difference immediately in your monthly payments, with every $100,000 borrowed it will be approximately $10/month.

New buyers can also expect to pay a little bit more on their monthly mortgage payments than in the past few years, however the stress test of 4.64% will ensure that they will still be well qualified to get a mortgage.

The real estate market may start to slowly cool if we see more increases like this. When rates are lower, buyers can take out bigger mortgages, meaning bigger sales and a hotter market--but higher borrowing rates reverse that trend.

This rise in interest rates is a sign to look at your finances, but it's not a reason to panic! Interest rates alter borrowing habits over time, but homeowners shouldn't notice a drastic change all at once. Buyers might even see it as an opportunity: if they were priced out of the market while it was hot, they can now can take advantage of cooler prices.

We're always happy to chat about your questions or concerns about the real estate market in Ottawa. Call or email any time to talk about the future of your home!

Rachel Hammer

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This Month's Question:

Which of our current residential listings is an ENERGYSTAR home?

The first five individuals to respond correctly will win a $10.00 gift card to Starbucks. Thank you and good luck!

Email your answers to: info @rachelhammer.com.

(Only one winner per household will be awarded a gift card and all previous winners must wait a minimum of 30 days before being able to win this trivia question)