Hard pressed borrowers have nowhere to run
Interest rates in Canada have jumped to a record level of 4.25%, while house prices have crashed to historic lows at the opposite end.
The Bank of Canada has just announced the interest rate increase by 50 basis points but signalled that aggressive hikes could be ending soon.
This is the seventh consecutive increase since the Bank began hiking rates in March in a bid to slow the economy and curb runaway inflation.
The central bank said in a press release, “looking ahead, the Governing Council will be considering whether the policy interest rate needs to rise further to bring supply and demand back into balance and return inflation to target. “
Since the interest rate hikes, core inflation, which strips out the cost of food and energy, has begun to moderate and the housing market has cooled dramatically.
Canadian housing market stays cool and prices drop by over $170,000
Canada’s housing market has continued its downward trend, with the volume of home sales down by more than a third compared to the boom times of last year — and prices down by almost 10 per cent or more than $170,000 since then.
The Canadian Real Estate Association, which represents Realtors, said the national average selling price of a home that sold in October went for $644,643. That’s down by 9.9 per cent compared to the same month a year earlier, and down by even more from the peak of $816,720 in February 2022.
This is probably the best time to buy a house…if you can qualify for a mortgage.