{"id":6279,"date":"2017-06-29T10:10:03","date_gmt":"2017-06-29T17:10:03","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=6279"},"modified":"2017-06-23T10:07:31","modified_gmt":"2017-06-23T17:07:31","slug":"how-higher-interest-rates-will-impact-canadian-housing","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2017\/06\/how-higher-interest-rates-will-impact-canadian-housing\/","title":{"rendered":"How Higher Interest Rates will Impact Canadian Housing"},"content":{"rendered":"<p style=\"text-align: justify;\">A looming interest-rate hike is likely to cool the Canadian housing market to an extent, but higher borrowings costs won\u2019t be enough to significantly water down demand despite several real estate-related implications, according to Desjardins.<\/p>\n<p style=\"text-align: justify;\">\u201cA slowdown is expected, particularly among first-time buyers,\u201d writes H\u00e9l\u00e8ne B\u00e9gin, a senior economist with Desjardins, in a Spotlight On Housing report.<\/p>\n<p style=\"text-align: justify;\">\u201cFor others, the impact will be felt when they renew their mortgage loans,\u201d she adds.<\/p>\n<p style=\"text-align: justify;\">In the report, B\u00e9gin outlines impacts a Bank of Canada overnight rate hike, which some observers are calling for as early as this year.<\/p>\n<p style=\"text-align: justify;\"><strong>Borrowers with variable-rate loans will face higher debt servicing costs quickly<\/strong><\/p>\n<p style=\"text-align: justify;\">\u201cAn interest rate hike will have an immediate effect on holders of variable-rate loans and personal lines of credit,\u201d B\u00e9gin begins.<\/p>\n<p style=\"text-align: justify;\">But following a central bank rate move, some consumers will be affected sooner than others.<\/p>\n<p style=\"text-align: justify;\"><strong>But many borrowers with fixed-rate mortgages won\u2019t be impacted right away<\/strong><\/p>\n<p style=\"text-align: justify;\">Fixed-rate mortgage rates track in line with yields on government bonds spanning the same time period, as banks use bonds to fund mortgages. So a five-year fixed-rate mortgage largely reflects the yield on a five-year bond, for example.<\/p>\n<p style=\"text-align: justify;\">\u201cFor fixed-rate mortgage loans, the effects will be spread out over their maturities, as they highest interest rates will be required at renewal based on the term initially chosen,\u201d the Desjardins senior economist continues.<\/p>\n<p style=\"text-align: justify;\">Put another way, those consumers who have their rates locked in won\u2019t see their debt-servicing costs increase until they have to renew their mortgages.<\/p>\n<p style=\"text-align: justify;\"><strong>First-time buyers will be hit harder than others<\/strong><\/p>\n<p style=\"text-align: justify;\">While a fourth consideration is how first-time buyers, who typically put forward smaller downpayments, will be most adversely affected, Begin notes \u201cthe economic situation remains favourable for households in Quebec and Ontario.\u201d<\/p>\n<p style=\"text-align: justify;\">In fact, both provinces are seeing growth in the number of jobs, while their respective unemployment rates have generally trended downward since 2010, according to Desjardins research.<\/p>\n<p style=\"text-align: justify;\">\u201cThe positives for Quebec households continued to accumulate,\u201d writes B\u00e9gin. \u201cIn Ontario, the job market improved less dramatically, as did consumer confidence,\u201d she notes.<\/p>\n<p><a href=\"http:\/\/news.buzzbuzzhome.com\/2017\/06\/3-things-consider-higher-interest-rates-canadian-housing.html\" target=\"_blank\" rel=\"noopener\">3 Things to Consider About How Higher Interest Rates will Impact Canadian Housing<\/a> by Josh Sherman | Buzz Buzz Home<\/p>\n","protected":false},"excerpt":{"rendered":"<p>A looming interest-rate hike is likely to cool the Canadian housing market to an extent, but higher borrowings costs won\u2019t be enough to significantly water down demand despite several real &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2017\/06\/how-higher-interest-rates-will-impact-canadian-housing\/\">read more<\/a>]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[],"class_list":["post-6279","post","type-post","status-publish","format-standard","hentry","category-mortgage"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>How Higher Interest Rates will Impact Canadian Housing &#8226; Rory C Real Estate | Oakwyn Realty<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.roryc.ca\/blog\/2017\/06\/how-higher-interest-rates-will-impact-canadian-housing\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"How Higher Interest Rates will Impact Canadian Housing &#8226; 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