A combination of variables is driving the slowdown in large cities like Toronto and Vancouver, as well as their surrounding areas. Sentiment is changing as a result of inflation from Russia’s invasion of Ukraine, deteriorating housing capacity, and rising fixed and variable mortgage rates.
Home prices in Canada have risen 52% over the past two years, according to Reuters, thanks to record-low mortgage rates. However, demand is waning as fixed mortgage rates rise along with rising bond returns, and variable rates rise after the Bank of Canada increased it for the first time in three years.
According to BOCWATCH, the money market expects the central bank to increase its policy rate from 0.5% to 2.25% by the end of the year.
“It’s the most dramatic increase in five-year fixed rates that I can remember, and I’ve been in this business for two decades,” David Larock, a mortgage agent at Integrated Mortgage Planners, told Reuters. Starting to see buy and sell agreements with financial terms, which has been unheard of in the past few years. ,
Marnie Bennett, owner of Bennett Property Shop Realty in Ottawa, has also seen a change in the market, according to Reuters. The change was particularly noticeable on the lower end, as affordability concerns prevent first-time buyers and investors from cashing out at the market’s peak.