What the rising Bank of Canada interest rate means to you

Episode 263 of the Toronto Real Estate Musing daily video blog.

On September 8th, the Bank of Canada announced a raise in the overnight interest rate by 0.25% to 1%. This translates to a “prime rate” of 3%. It’s also been the third consecutive time they have raised the rate; you may recall the rate sitting at the historically low point of 0.25% during most of 2009. So, what does this mean for home buyers and sellers?

The short answer is, not much. The overall mortgage landscape has not changed dramatically, so standard prudence still applies.

For example, a variable mortgage rate is still quite attractive for buyers of real estate. As always, do your due diligence, calculate and understand what rate you will have to pay over the period of your mortgage. Continue to negotiate with your lender and use a good mortgage consultant.

For those wishing to sell their house in Toronto, this comes down to pricing the property properly and ensuring your real estate brokerage is doing everything they can to market your property.

FYI, most analysts do believe this will be the last of interest rate hikes in a while. Due to the slower recovery of the overall global economies, especially that of the United States, the Bank of Canada may adopt a wait-and-see position into 2011.

Related posts:

1. Bank of Canada keeps interest rate low, but not for much longer
2. What will New Year’s 2011 bring for Canadian mortgages?
3. Why a US-style real estate market crash won’t happen in Canada
4. Introducing RateHub.ca: a new Toronto real estate startup for mortgages
5. What the CREA, Competition Bureau decision means to you