Mortgage rate hike could have 'psychological impact' on Calgary market
Local realtor says July has been busy as people with secure rates and pre-approvals jump in to market
After almost a decade of warnings, the Bank of Canada is expected to hike interest rates on Wednesday. The resulting increase in mortgage rates could have an impact in Calgary.
Speculation around an increase could already be heating up the generally cool July housing market.
Local realtor Lucas Ramage sayshe hasbeen busier than usual.
"That would be driven by people who have a secure interest rate in hand, or a pre-approval from a bank that they want to take advantage of," he said.
"And so I know that we ourselves have seen that type of activity over the last week or so since that's become the news, where otherwise they might be less motivated to lock in on something and pull the trigger and make a purchase. It's like 'now's the time, let's do this while the rates are good.'"
That's the short-term impact.
Market cooling
Peter Kinch, a mortgage and investment advisor with the Real Estate Investment Network,says over the long term it could have a dampening effect on the Calgary housing market.
"I think what's interesting and what concerns me about Calgary in particular is the psychological impact in terms of consumer confidence," he said.
Kinch says after years of historically low interest rates, the increase is overdue and most households will be able absorb it. But those who have borrowed against their home equity will feel the pinch.
An Ipsospoll commissioned by insolvency trustee firm MNP Ltd. that was releasedMonday said 61 per cent of Albertansare concerned about the effect of rising interest rates on their finances.
Three in 10 Albertans said they agreed with the statement that they were "in over their head" with their current mortgage payments.
With files from Allison Dempster
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