Let's break it down:
Sellers : An increase in interest rates will lead to higher borrowing costs for potential buyers that need financing. This can reduce the purchasing power of buyers and potentially decrease the demand for homes. As a result, sellers might experience a slowdown in the real estate market, which could lead to longer listing times and possibly, and potentially fewer offers even lower selling prices.
However, it's important to note that various factors, including market conditions and economic indicators, can influence the overall impact on sellers. With all that taken into effect, I've been saying for years that one of the biggest factors is inventory, inventory, or lack of it!

Buyers : Higher interest rates mean increased borrowing costs for almost all homebuyers. This will lead to higher mortgage payments and potentially reduce the purchasing power of buyers that need a mortgage to purchase your home ( all non cash buyers) As a result, some buyers may be discouraged from entering the market or may need to adjust their budget and expectations. However, higher interest rates can also indicate a strengthening economy, which may lead to increased job security and income growth, benefiting potential buyers.
It's important to recognize that the real estate market is influenced by numerous factors, including supply and demand ( inventory ) dynamics, economic conditions, and buyer sentiment. The impact of an interest rate change can vary depending on these factors and the specific context of our housing market which is currently a Sellers market.

If you're a seller or buyer in the Vancouver, Greater Vancouver or Fraser Valley area, it's always a good idea to connect with us, as we closely monitor the Vancouver and area real estate market. 
We here at RE/MAX are your real estate professionals who can provide you with the insights and guidance based on your specific individual needs. Give us a call.
We’ll always make time for you!

There has been much speculation about what rising interest rates could do to Canada’s hot housing market.

Now a new study by the British Columbia Real Estate Association attempts to put some numbers on the future.

Home sales are expected to fall and home price growth will moderate, according to the report by chief economist Brendon Ogmundson.

“In the past, Bank of Canada tightening has usually led to falling home sales and flattening home prices, so it wouldn’t be a surprise to see the same happening in the upcoming round of tightening,” he said.

His study looks at four scenarios ranging from the Bank’s overnight rate returning to a pre-pandemic level of 1.75% to it reaching above 3%.

Under the first scenario, sales could be expected to fall by 25% at the end of two years.

* “If the Bank does raise its policy rate more aggressively in response to an overheating economy, then our models show that home sales would decline more significantly,” the study said.

One thing that makes such predictions more difficult this time around is the B.C. housing market currently has a record low number of active listings.

“With markets so out of balance, we expect home price growth to slow but to what extent depends on the final rate destination for the Bank of Canada and for Canadian mortgage rates,” said Ogmundson.

*The Bank of Canada could start that tightening as early as next week, a growing number of economists say.

TD Securities and Laurentian Bank made the Jan. 26 call Monday, while Scotiabank says the central bank “cannot afford” to wait any longer, reports Bloomberg. 

The Bank of Montreal has brought forward its call to March from April.

*Markets are pricing in a 75% chance of a Jan. 26 hike, with traders betting on as many as six rate increases over the next year.

* sent in email earlier to select contacts VHT 

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