SIR Logo

Call Andrew at 1 (855) 876-7334

What Should Home Owners and Real Estate Investors to do About the Bank of Canada’s Largest Rate Since 1998

Portrait Andrew Schulhof

#303-1338 West Broadway
Vancouver
British Columbia
V6H 1H2

Worry Less sign on table
What you need to know about the Bank of Canada's recent 100 basis point rate hike and how it might impact your real estate plans moving forward. Spend less time worrying and more time planning for your future.

I asked one of my most trusted friends and profoundly intelligent mortgage brokers, Keaton Kirkwood, to write a brief article about the effects of the Bank of Canada’s largest rate since 1998 and what clients can and should do about it.

In fact, his latest perspective on the ramifications of this latest increase and anticipated further increases was just reprinted by a major publication.

Quick Facts 

July 13, 2022 – Today’s increase reduced buying power by 10%.

Buying power has declined roughly 20% for fixed rates since Feb 2022.

Today’s increase will cost roughly $81 per $100,000 borrowed but only increase payments by $56 per month (for an amortized mortgage).

Variable Rate Mortgages will not see an increase in payments but Adjustable Rate Mortgages and Home Equity Lines of Credit will.

Suggestions for Concerned Homeowners About Rising Interest Rates

  • Complete a personal budget to determine the total cost of housing you can afford (let us know if you need a tool for this)
  • Work out at what interest rate you reach the limit of your maximum housing budget (we can help with this)
  • Use this maximize allowable rate to determine if a fixed or floating rate option is best for you.
  • Borrowers can consider increasing their amortization to reduce payments as well.

What The 100 Basis Point Rate Increase Means for the Market?

At this point, there is no questioning the fact that rising interest rates have begun to impact the borrowing power of home buyers. The “stress test” is beginning to force borrowers to consider between qualifying for larger mortgages with the uncertainty of variable rates or qualifying for less with the predictability of fixed rate mortgages.

If rates continue to rise and mortgage applicants continually qualify for less it seems logical that the housing market could fall in sync.

It will be interesting to see if policymakers begin to consider increasing maximum amortizations beyond 25/30 years to alleviate the rising cost of mortgages and offset the decline in borrowing power.

The flip side is that a slower market may be a great time for buyers to find value. Whether is a wider lot, a unique floorplan or a suited property its worth keeping your eyes open!

If you have concerns and don’t have Please contact Keaton Kirkwood at [email protected] and mention my name in the email subject line to ensure that you don’t get lost in the multitude of emails.

Get in Touch

If your are interested in investing in real estate, or looking to list your current home, I can help you form the appropriate strategy and answer any questions you may have. 

Related Posts

7 Ways to Recession Proof your Real Estate Portfolio

With rising rates and an inflationary environment, the likelihood of recession grows larger. It is extremely important to take the time to make sure your real estate portfolio is built to withstand what may lie ahead.

Why Value Investing in Real Estate Makes Sense with Rising Interest

It is still possible to find value in real estate investing even with rising interest rates. Real estate comes with tax benefits, acts as an inflation hedge and has potential for significant appreciation beyond that. Changes to the market just mean that the work you put into your strategy becomes that much more important to optimize your portfolio.

5 Life Lessons Learned in 2022

Lots of valuable lessons were learned through 2022 as we were all presented with a degree of hardships, challenges, and opportunities. It is important to take time to reflect on everything that was learned so that these lessons aren’t wasted ones.

The BIG Benefit of Lifestyle Investing!

Lifestyle is all about improving the quality of your life through real estate and a well constructed strategy. Create the experiences you want for yourself and learn how to do so with the right real estate investment strategy.

Header Image

Investing in Properties with Negative Cash Flow? Why?

Does an investment property have to cash flow to be successful? With the right strategy in place and knowing what skills and circumstances are specific to you, you can find the right market and real estate to make positive investments.

Is Alberta the Best Province to be a Landlord?

Let’s examine the various attributes each province has that feed into being a landlord and owning investment real estate. Which province is the most attractive to real estate investors and why?

Heading of the blog, monopoly board with a card reading,5" Mistakes Landlords Must Avoid"

5 Mistakes Landlords Must Avoid

It is more important than ever to make sure you are doing everything you can to get a positive return on your real estate investment properties. Avoid these 5 mistakes that landlords make and you will be well on your way to a profitable portfolio.

Hourglass in front of a sunset

Should you Buy Real Estate and Wait or Wait to Buy Real Estate?

Keaton Kirkwood does an excellent job of breaking down tough scenarios as a mortgage broker. Is it the right time to buy? Should you wait? He brings reason and a balanced, professional opinion to a difficult question in real estate investing right now.