Sunday, August 21, 2022


                 Sell or Buy, You Get to Fly!



Win a $4,000 travel voucher from Realty Executives Focus!* 

All you have to do is buy or list your property with one of our Agents, contract must be firm (also known as conditions removed or sold) by December 31, 2022 and that’s it! 

T&C:*

1. Entry is valid to all Canadian residents who buy or sell a property with a Realty Executives Focus Agent in 2022.

2. The property must be in a firm contract (also known as sold or conditions removed) by December 31, 2022. 

3. The winning entry will receive a travel voucher to the value of $4,000.00.

4. Winner will be drawn on January 3, 2023. The winner will be contacted via E-mail. 

5. The voucher can be used for any form of travel to be booked with our travel agent before the 31st of December 2023.

Each office is independently owned and operated. Not intended to solicit individuals under contract with another Brokerage. Draw and incentive offer subject to rules and eligibility agreement. 

Visit us at www.buysellfly.ca for more info! #REFOCUSTRAVEL 

Now that restrictions are lifted and we are moving forward from the COVID-19 pandemic era – this is a great chance to start fresh!

Click here for a free market evaluation where we can take a look at your home and see what potential numbers we can work with. It is not an obligation to work with us as a Realtor but I would love to be your resource.



 


                        How Will Higher 

                  Interest Rates Affect Me?


Rising interest rates can cause fear and doubt in the real estate market. It is important to understand what this means and how it can affect your particular situation.              

 Canadians have enjoyed low interest rates for the last decade but even more since the onset of the global pandemic. During that time, the Bank of Canada responded with a trio of rate cuts, bringing us to 0.25%. However, fast forward to 2022, we have already seen three interest rate hikes in response to soaring inflation rates which reached a 39-year high in May, at 7.7 per cent. 

What does an interest rate hike mean if you’re planning to buy a home, if you already have a mortgage, or are carrying any other debt? Let’s take a step back to better understand what causes these changes in interest rates and how a higher rate might impact you.

What Causes Interest Rates to Rise or Fall?

The Bank of Canada is our central bank, and along with its Governor, is responsible for setting monetary policies, printing money, and the Bank’s interest rate. Per the Bank, its principal role is “to promote the economic and financial welfare of Canada,” as defined in the Bank of Canada Act.

A good example of this is March 2020, when the Bank implemented a trio of interest rate cuts in an effort to protect the Canadian economy from the fallout of COVID-19. The Bank’s key interest rate remained unchanged for about two years, sitting at 0.25%. A low rate aims to boost the economy when a slow-down is anticipated. It serves as a guideline for other banks and lenders when they set their own interest rates­­ – including mortgage rates. The hope is that reducing the cost of borrowing will encourage consumers to keep spending and thus, the economy keeps humming along.

Fast forward to post-pandemic July 2022, Bank of Canada has implemented multiple interest rate hikes to slow down soaring inflation.

How Will Higher Interest Rates Affect Me?

What happens when interest rates rise? As the economy recovers, interest rates will typically rise. However, as we saw in the wake of COVID-19 in a down economy, they will fall. When the Bank makes changes to the policy interest rate, similar changes can occur in short-term interest rates. This includes the Bank’s prime rate which is often a reference point for big banks and other lenders when they determine their own interest rates.

Different Scenarios

A higher interest rate means borrowing money is more expensive. This applies to all debt. From car loans and student loans, to lines of credit, outstanding credit card balances and yes… mortgages. On the flip-side, if you have investments or money parked in a high-interest savings account, you may see higher returns.

If you already own a home and are locked into a fixed mortgage rate, a higher interest rate won’t affect your mortgage payments for the term of your mortgage. When it’s time to renew, you may be doing so at a higher rate, which means less of your hard-earned money is going toward paying down your principal loan.

If you have a variable-rate mortgage, an interest-rate hike would mean a larger portion of your regular mortgage payment will be allocated to interest, versus principal.

Meanwhile, those who are in the market to buy a home will feel a more-immediate pinch, in the form of a higher mortgage interest rate. And if you’re hoping to buy a home in a pricey market, such as Toronto or Vancouver, that pinch could feel more like a punch. Depending on the amount borrowed, even an increase of one per cent can mean thousands more paid in interest over the life of a mortgage.

Those who are also carrying other forms of debt, such as credit card balances, will also get hit with a higher cost of borrowing.

How Could This Change Impact Canadian Real Estate?

Might a higher lending rate cool the Canadian housing market? Potentially. One reason for the high demand and flurry of market activity that took place in 2020 and 2021 was the rock-bottom interest rate. This prompted many prospective homebuyers to get off the fence, so to speak, and expedite their purchase to take advantage of the attractive rate. (That is, if they could find a home to buy in this tight market.)

On the other hand, could a higher interest rate heat up the market? This scenario is unlikely once the higher rate is in effect. However, it’s not unheard of for home-buying activity to pick up before an expected increase.

How To Prepare for Higher Rates Ahead

It’s safe to say interest rates will rise, eventually. Now that you have a better idea of how higher interest rates may affect you, what can you do to prepare for the inevitable pinch to your pocketbook?

  • Pay down your loans as much as possible, while interest rates are still low. Whether it’s a mortgage or another type of loan, a lower interest rate means more of your payment goes toward paying down principal.
  • If you’re carrying multiple debts, consider a debt payment strategy. There’s many types of programs and guides such as debt avalanche or debt snowball to help pay down those debts.
  • If you’ll be shopping for a home, get pre-approved for a mortgage. Not only does this give you a good idea of your home budget, but doing so also locks in the current (lower) rate for a period, often 90 or 120 days. And getting pre-approved costs you nothing.
  • If you have a variable-rate mortgage, discuss your options with your lender or financial adviser. Consider locking it in for a fixed term at the current lower rate.

Of course, it’s always wise to discuss the details of your financial situation and goals with an accredited financial adviser. And speaking of professional help, I have 17+ years of real estate experience that can help you navigate the Albertan real estate market. Let’s find your next home, investment property, and more.

Whether you are looking to buy or sell, invest in your first property or tenth property, I can help you with all things real estate. I have worked with clients all over EdmontonSherwood ParkFort SaskatchewanSt. Albert and other surrounding cities. Feel free to contact me direct at 780 699 5018 or email me, if you have any questions or would like a quick chat.