Have you noticed how much interest rates have crept up? Back in January the target rate (the value at which the Bank of Canada lends money to banks) was only .25%. Today its 3.25%.
In simple terms for every one percent increase reduces your ability to borrow at the same payment by about 10%. Let’s pretend you approved to borrow $400,000 back in January. Today you might be approved for only $360,000.
If you still want to buy a home what are your options? Here are two.
First you can bring more money to the transaction i.e., a bigger down payment.
Second you may have to consider a less expensive home.
What will happen to prices?
At the higher end of the market, we may see home values come down as there will be accelerated pressure on affordability. This could be a time to ‘go predatory’ if you are shopping above say $750,000.
Mid-priced home values may flatten.
Lower priced homes for example those under $400,000 may even increase in value as the number of buyers competing for these homes increases due to lower affordability above that figure.
You can take some comfort in that Edmonton and area remains one of the most affordable markets in North America. Read this blog for more information. How Affordable is Edmonton?
There’s lots of affordable options for you and for most people owning a home with the certainty it provides beats renting.
To shop for ALL homes in the metro Edmonton area please go to our website www.AmbergateHomes.ca.
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