Rate hikes hindering market
Casey Richardson - Jan 26, 2023 - Biz Releases

The Bank of Canada’s announcement of an increase in interest rates on Wednesday morning will affect the Okanagan housing market for both buyers and sellers.

As mortgage rates tend to move with interest rate changes, Association of Interior Realtors president Lyndi Cruickshank said it ultimately affects a buyer’s ability to purchase, causing a slowdown.

“It’s made a lot of people really cautious. I think there are a lot of people that have taken a bit of a pause or a break and are waiting to see what’s happening. They’re waiting to see whether this is the end, whether we’re going to see interest rates continuing to go up,” she said.

“It’s so important when people are looking at making that big investment that they’re talking to the people in the know, that they’re reaching out to their mortgage broker, they’re talking to their bank lender, and they’re finding out what those realities are for them so that they know what price range they should be looking in, in order to make sure that they are able to still live and enjoy their quality of life while still owning a home.”

Interest in the housing market dipped down with the hike increase, muting the past year’s influx of buyers and competition.

“The reality is when the demand starts to decrease, we typically see home prices start to go down,” she said. “So we are starting to see that settling, and we’re starting to see prices coming down a little bit. So there are a lot of really great opportunities for people that are looking to get into the market or to make that move in the market.”

This can, in turn, upset sellers, who think their house is worth less now.

“I think what we’d all like to see is a settling in the market. We’d like to see consumer confidence back at a place where people feel like they can move forward and make the decisions that they so dearly want to be able to make,” Cruickshank said.

“Until we get a sense from the Bank of Canada that these interest rate hikes have settled down and they’re done, at least for a while, it’s really hard for people to feel confident in the market.”

The hike is the eighth issued by the bank in less than a year, in an effort to tackle Canada’s high inflation rate.

“I think it certainly shocked a lot of people,” Cruickshank said. “I understand that the impact that those rapid increases in interest rates have had on people has been significant. And I know that it’s hurt a lot of people. My hope is that people with the mortgages that they had, or still have, are still in a place where they can manage. It’s definitely not ideal.”

The Okanagan typically sees a slowdown in January, as people take time to consider putting their houses up for sale in the spring.

“That’s not to say that January is not a great time or February, because there are still a lot of buyers out there,” she said. “So I always tell people that when the time is right for them, that’s the time to do it.”


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