(Black Press Media files)

Rate hike could ‘compound’ slowdown of B.C real housing market: realtor

Rate increase will likely mean buyers take a more cautious approach

The Bank of Canada rate hike announced earlier Wednesday morning could continue to slow down the B.C. real estate market, according Royal LePage West Real Estate Services.

In a statement, the bank said the 0.25 per cent increase to a 1.75 per cent rate was in response to the recently signed trade deal between Canada, the U.S. and Mexico.

Adil Dinani, a realtor with Royal LePage, said although the rate hike meant the Canadian economy was moving in a positive direction, it could temper the B.C. real estate market.

“This is a marginal increase, but if you look at the past 12 months, we’ve seen rates move up over one per cent,” said Dinani.

“This does create some challenges on behalf of borrowers, [both] to get approved and to manage those increasing borrowing costs.”

Dinani said that the rate hike will likely have “compounding effect” on the housing market slowdown already caused by new mortgage rules and the anticipation of the NDP’s speculation tax.

The latest figures from the B.C. Real Estate Association show that residential sales were down by 33 per cent this September, compared to the same month last year.

In Greater Vancouver, sales dropped by 43 per cent and the South Okanagan saw a decrease of 49 per cent.

“They’re all leading towards a cooler housing market in Vancouver,” said Dinani.

“When you have a plethora of policy changes being thrown at any market, buyers take more of a cautious approach.”

Dinani cautioned that although a drop in the housing market may seem strange after a decade of near-constant growth, it is a normal feature of a cyclical sector.

“It’s normal for markets to have corrections and adjustments,” he said.

“These corrections are normal, natural and I would say healthy for the long-term sustainability of the market.”

READ MORE: Startup offers $1 way into B.C. real estate

In places like Greater Vancouver sales have dropped by more than 40 per cent compared to this time last year, but Dinani doesn’t foresee a crash.

“The narrative of why everyone was buying is still very much intact: the desirability of living in Vancouver, the political and fiscal climates are all very positive,” he said.

“I think we’re still going to see the demand from people that are migrating here.”

Dinani said most of the effect will be concentrated on those still looking to buy into the housing market, rather than those with mortgages.

“A lot of clients are on five-year fixed mortgages so this increase doesn’t impact them whatsoever,” he said.

“The group that it does impact are the group that took on variable mortgages… those folks will be marginally impacted on a monthly basis.”


@katslepian

katya.slepian@bpdigital.ca

Like us on Facebook and follow us on Twitter.

Just Posted

Valley SPCA overwhelmed with 45 cats taken from local property

Many of the cats have never been around humans, or have never been touched or handled.

BIG READ: The two sides of the Strait of Georgia roe herring fishery

The case for the Strait of Georgia roe herring fishery Comox fisherman,… Continue reading

Applications open for record bursary, scholarship funding at North Island College

Current and future North Island College students can now apply for scholarships… Continue reading

Second Stage Players present laughter and love in We Are Family

Get your tickets early to see the Evergreen Club’s Second Stage Players’… Continue reading

Verdict gives murder victims’ parents sense of closure

A guilty verdict delivered earlier this week was “like a weight lifted off the chest.”

VIDEO: Can you believe it? This B.C. hill pulls cars backwards up a slope

Sir Isaac Newton had clearly never been to this Vernon anomaly when he discovered gravity

Comox Valley Hospice Society finds new Ocean Front home

Comox Valley Hospice Society (CVHS) recently announced plans to construct a new… Continue reading

Couple rescued after Sea to Sky Gondola refused ride down hill

‘We were cold as hell, my lips were blue. I cried the entire way down’

Having phone within sight while driving does not violate law: B.C. judge

The mere presence of a cell phone within sight of a driver is not enough for a conviction, judge says

B.C. man sentenced for tying up, assaulting and robbing another man at hotel

Gabriel Stephen Nelson robbed and assaulted travelling businessman in Nanaimo in 2017

B.C. girl and her toy monkey make videos to fight negativity on Facebook

Ava Ast created the Ava and Cello’s Good Deed Page last month

Deadline extended through April to nominate top B.C. educators

Second year of Premier John Horgan’s awards offers $3,000 bursary

Paramedic staff shortage at critical level: B.C. union

A number of units were out of service due to lack of staffing in Lower Mainland, union says

B.C. lottery winner being sued by Surrey co-workers

They claim he owes them $200,000 each, in a lawsuit filed in B.C. Supreme Court in Vancouver

Most Read