The Bank of Canada recently dropped their key lending rate in July… Before you get too excited, it’s important to understand what these rate cuts really mean for you as a homebuyer.
The Reality Behind Rate Cuts
Rate cuts generate excitement, especially after the significant rate increases we’ve seen in the past few years following COVID in 2020. As inflation rose, the Bank of Canada raised rates to cool down the economy. So, a rate cut might seem like a welcome relief. Unfortunately, rate cuts aren’t necessarily a sign of a healthy economy. In fact, they often signal that the economy is slowing down, which can lead to job losses and other economic challenges.
How Rate Cuts Affect the Real Estate Market
In a city like Edmonton, a rate cut can be more stimulative for the real estate market compared to Toronto or Vancouver, where prices are very high. However, crucial to remember that mortgage rates will fluctuate—they go up, and they come down. If a quarter-point difference in your mortgage rate is what will drive your decision to buy a home, it might be time to reconsider.
There are many expenses associated with homeownership beyond the mortgage rate. Property taxes, for instance, are currently a big topic of discussion as many cities pass along large increases. A quarter-point difference in your mortgage rate might only amount to $15 per $100,000 of your mortgage in monthly payments—a relatively small factor in the grand scheme of homeownership costs.
When deciding whether to buy a home, it’s important to look at the bigger picture. Mortgage rates are just one piece of the puzzle.
I am here to ensure that your path to homeownership is not only successful and seamless, but also rewarding. If you’re looking to get pre-approved for a mortgage to buy a property in Edmonton, fill out my online application. I’m here to help you every step of the way.
About Jason Scott, Edmonton Mortgage Broker
Looking for a personalized mortgage solution? As an Edmonton Mortgage Associate, I’ll be your trusted partner who will help you get the right mortgage for your family home or Investment property. I’m Jason Scott, and I’ll be your Mortgage Broker in Edmonton.
