How Does the Interest Rate Impact the Toronto Real Estate Market?
In recent years, the Toronto real estate market has been a hot topic among many. Mainly a reason because of the higher interest rates by the Bank of Canada. Impacting the decision making of real estate investors in Toronto and throughout Canada, where properties are typically purchased using mortgages from financial institutions, and these interest rates may change the borrowing ability because of higher rates of mortgage payments among many.
If you are a first-time buyer, it is a great time to enter the real estate market, call Trust Condos today to learn more about how we can help you navigate the market.
How Does the Interest Rate Impact the Real Estate Market?
An increase in interest rates would impact real estate markets throughout the country. It is important to understand a few things to understand how an increase in interest rates may change plans of real estate investors and how markets may be impacted due to these increases.
· Mortgage Rates
Investors need to know that changes in interest rates may directly impact mortgage rates. If the key interest rate is higher, the bank may ultimately increase the mortgage cost, reducing the number of potential home buyers who will be qualified for and afford a mortgage.
· Market Supply and Demand
If interest rates are low, a greater number of people may be able to qualify for mortgages, ultimately increasing competition among buyers in the market, as well, outpacing supply. However, if interest rates are higher, a greater number of people may sell their homes because of larger mortgage payments and less buyers would enter the market because of these rates.
In both a scenario of low and high interest rates, it is important to work with experienced and knowledgeable real estate agents to help you navigate the real estate market, contact us today, to learn more about how we can help you.
· Rental Market
During periods of high-interest rates in the real estate market, some first-time home buyers may prefer to change their plans on buying their own homes to instead rent. Potentially leading to an increase in competition within the rental market, influencing landlords to increase rental prices. Understanding these market types is important, helping to understand the best practices to mitigate risk.
· Real Estate Investment
Suppose you are looking to increase your real estate portfolio. In that case, for many investors the lower interest rate period may be considered an ideal time to do so with the help of a professional and skilled real estate agent. High demand in the housing market can increase the asking prices of new homes even further. For existing investment property owners, higher interest rates can be beneficial, as more people tend to rent rather than buy, increasing demand for rentals and enabling landlords to raise rents according to landlord and tenant board guidelines.
· New Construction
Lower interest rates may be favourable to developers seeking investment opportunities. However, If the interest rate increase, builders or developers may not prefer to take high risks for borrowing loans from the banks because of greater potential risks and lower profits.
How Trust Condos Help You?
Whether you are looking at new condos, townhomes, or any other type of property anywhere in the GTA region, Trust Condos will help throughout the transaction journey. With a large database of properties throughout the GTA region. Guiding our clients in both high and low interest rates in the real estate market. Contact us today and set an appointment to learn more about how we can assist you in navigating the real estate market and find a property according to your investment objectives or helping you to sell your property in this market.
The information on this blog is based on our experience. Readers/Users are strongly recommended to obtain independent property, mortgage, legal, tax or accounting advice. The information displayed is for reference only and is without any representations or warranties.
