Social Links Widget

Click here to edit the Social Media Links settings. This text will not be visible on the front end.

First-Time-Homebuyers • 3 August 2023

How Inflation Affects Mortgage Rates

by Bhupinder Singh

How Inflation Affects Mortgage Rates

While you may be hoping that the Bank of Canada (BOC) would stop the rate hikes as the inflation targets are coming closer, looks like they will not stop soon, as it may help increase the inflation back again. Same was the case earlier this year in March and April, when the BOC decided to keep the overnight rate at 4.5% at two consecutive scheduled meetings, which fired back. Instant changes in spending habits were experienced, the real estate market was affected especially, as the demand increased due to influx of buyers and average purchase price went up again by 8-9%.

What is the effect of this on you?

Simply put, inflation and mortgage rates are directly proportional. That means when the inflation is high, so are the mortgage rates and vice-versa. Considering the inflation targets are met, lower mortgage rates will follow. This will make it easier for you to buy a house as you can afford more for the same monthly payment, this increases your affordability in general.

This graph shows the relationship between the inflation and the prime rates of lending from year 1960 to 2023, the said trend can be easily found throughout those years:

How Inflation Affects Mortgage Rates

How Inflation Affects Mortgage Rates

 

As seen in the graph, inflation (shown in the blue) is following the downward trend and, based on historical trends, mortgage rates (shown in the red) are likely to follow.

Bottom Line

Inflation is staying stubbornly high. The economy has been remarkably good, the labor market is strong, but that contributes to high inflation. The only tool that the BOC has right now to control it is the overnight rate; looks like they will keep playing till they feel comfortable.

These adjustments always create some opportunities and you should be in good hands to capitalize on those. You can always count on me for expert advice on housing market changes and what they mean for you.

Bhupinder Singh
Realtor®️ Salesperson
Century 21
First Canadian Corp.
Phone: 647-323-5310
Email: getrealwithinder@gmail.com
Web: getrealwithinder.com

Related Articles
First-Time-Homebuyers Reasons Why You Must Consider Hiring A Real Estate Agent Over “For Sale By Owner” When you think of selling your home by yourself, you may think that this would save you a lot of money. After all, the standard real estate agent’s commission is 3% to 4% — that’s $15,000 to $20,000 on a $500,000 home. Given the magnitude of this fee, you might think that acting as your […]
First-Time-Homebuyers What is a mortgage and the process of finding the perfect mortgage for yourself   There’s a good chance already know the basic concept of getting a loan to become a homeowner. But in reality, mortgages are fairly complex, as it includes financial calculations, offer comparisons, and various levels of approval. In this article, you’ll find out more about mortgages in simple, easy-to-understand language. I will guide you through […]
Uncategorized London Ontario School Search and Boundary Maps Your home address determines your school attendance, every school has its own set of boundaries. This is also known as a zone, catchment area or attendance area. Boundary studies or accommodation reviews are used to create and adjust school boundaries. There are two major school boards in London: 1. Thames Valley District School Board- TVDSB […]

CENTURY 21 First Canadian Corp. Brokerage

INFO & SERVICES

CENTURY 21 First Canadian Corp. Brokerage

420 York Street, London, ON N6B1R1

(519) 673-3390

INFO & SERVICES

Find a Home

Careers

Terms & Conditions

Privacy Policy

link to Century 21 Canada's facebook page Link to Century 21 Canada's Twitter page Link to Century 21 Canada's Instagram page link to Century 21 Canada's YouTube page
C21 Canada logo

Independently Owned and Operated. ®/™ trademarks owned by Century 21 Real Estate LLC used under license or authorized sub-license. © 2020 Century 21 Canada Limited Partnership © 2020 Century 21 Canada Limited Partnership

The trademarks MLS®, Multiple Listing Service® and the associated logos identify professional services rendered by REALTOR® members of CREA to effect the purchase, sale and lease of real estate as part of a cooperative selling system. The trademarks REALTOR ® , REALTORS ® and the REALTOR ® logo are controlled by The Canadian Real Estate Association (CREA) and identify real estate professionals who are members of CREA. Used under license. This listing content provided by REALTOR.ca has been licensed by REALTOR® members of The Canadian Real Estate Association. Not intended to solicit properties currently listed for sale or buyers under contract.

Century 21 Canada Limited Partnership currently has franchise opportunities available in select markets across Canada. The intent of this communication is for informational purposes only and is not intended to be a solicitation to anyone under contract with another real estate brokerage operation. This e-mail message contains confidential information intended only for the use of the individual or entity named above. Any unauthorized use or disclosure is strictly prohibited. If you have received this communication in error please immediately delete the e-mail and either notify the sender at the above e-mail address or by telephone.

© 2024 MoxiWorks