Mortgage interest rates are at their lowest point in many years. The Bank of Canada lowered the Prime rate in early 2020 in an effort to boost the economy hard hit by the pandemic. While these low rates are great news for both buyers and sellers, they are not likely to last much longer. Some experts predicted an increase in early 2022, which has not happened yet. This means there is still time for you to make your move.
Whether buying or selling, you’ll want to sit down with an experienced agent to weigh your options. Like any market condition, these ultra low-interest rates come with challenges and opportunities.
What this means for sellers:
One big challenge is an increase in competition from other sellers. Buyer motivation is at an all-time high, and every homeowner will want to capitalize on it. While the market continues to favour sellers overall, you still need to be very aware of the situation in your specific neighbourhood. If ten other homeowners put their property on the market all at once, it could drive down the value of your house. Timing is critical. Your real estate agent can help you determine market conditions and when the time is right for you to list.
The other challenge is that once you sell your home, now you become a buyer. You’ll face steep competition from other buyers in a market where demand far exceeds the supply.
The opportunity for sellers:
These low-interest rates mean that the monthly payment will still be affordable even if a home is priced high.
Those who had planned to wait a few years to upsize are making their move now. Downsizers are looking for smaller homes and often want to stay in the city.
Young families, more than ever, are seeking to buy larger rural homes away from the city.
And because the demand for new homes is so high, your property is almost guaranteed to sell. You’ll likely receive many offers with few or no conditions attached.
Thinking of buying or selling your home while rates are still low? Here are some more resources to help you prepare.
- How To Sell Your Investment Property When You Have Tenants
- Relocating to Peterborough: A Case Study
- Selling Your Home? Try These Five Tips to Attract Buyers
What low interest means to home buyers:
The first challenge is obvious: Buyers face fierce competition in their quest to find a new home.
You’ll need to be prepared for higher prices and more repair bills since you may have to place your offer with no conditions.
The opportunity for buyers:
It isn’t all bad news for buyers, however. These record-low rates can allow you to purchase a larger property or one in a more desirable area than you thought you could afford.
There are two ways buyers can be prepared to jump on this opportunity.
- Save as much as possible for your down payment. A healthy down payment doesn’t just make your offer more attractive to a seller; it saves you a lot of money in the long run. Your monthly installment will be lower, and it will be easier to secure financing.
- Get a pre-approval as soon as you can. This gives you an edge in a tough seller’s market. A seller is far more likely to accept your offer when you show proof that you can get financing.
Want more tips on buying a new home? Here are some other resources to get you started:
- Home Buying Conditions – What Buyers Should Know
- Five Ways to Save for Your Down Payment
- What Buyers Should Know About Bank Appraisals
What does all of this mean for the Peterborough Market?
House prices are rising all over the country, but Toronto has been hit particularly hard.
Some homeowners see this as an opportunity to get away to a smaller city. Financially speaking, it’s a smart idea. Suppose you were to sell a small house or condo in Toronto. In Peterborough, you could buy a large, spacious four-bedroom home with a backyard, a driveway and a garage!
Other buyers want to upgrade their family into a bigger house, and are willing to move further into the country to achieve this goal. If you own a sizable home in a rural area, this is your chance to command top dollar when you sell.
Downsizers are also leaving Toronto in droves, and for good reasons. A condo outside the city costs about a third of the price as one in Toronto. A new retiree could sell their home, live mortgage-free in Peterborough and still have money leftover.
Whether you want to buy, sell, upsize or downsize, these low-interest rates can open doors you previously thought impossible.
What will happen to the real estate market over the coming year? No one knows for sure, but here are our best predictions.
Do you want help selling your current home, or do you just need some advice? In either case, you can book a free seller’s meeting here.
