According to several sources in the banking industry, interest rates will go UP one more time in December 2022, before a measured and slow retraction commences at some point in 2023 and extending into 2024.

Why are interest rates still going up?

Because our inflation rate is nudging 7%. Interest rate increases make borrowing money more expensive and therefore we are encouraged to curb our spending.

As inflation backs off, the government will reduce the cost of borrowing with the intention that by the end of 2023, inflation will be back down to less than 3%.

What does this mean if you are considering buying a home?

Your payments will be more expensive than before. And you may have to look at a less expensive home.

It also means that if you leave your money in savings, its value will be eaten away. In other words, $100 today will be worth only $93 in a year’s time, (plus a bit of interest).

Whereas, if you use your money to buy a home, your new home will increase in value by perhaps 7% a year. In other words, your $100 invested in your home, could be worth $107 in a years’ time.

Home prices will typically track inflation over the long term.

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