The recent interest rate hike has put a lot of stress on the home buyers in Canada. The hike in the interest rates is slowing down the real estate market quite a bit. The people who had planned to buy homes in the first quarter of 2018 may be looking at whether renting or buying homes will work out to be beneficial in the long run.
The mortgage tests have also become tighter in 2018. So, the combination of the interest rate hike and strict policies on mortgages are making the potential buyers wait till the tide settles down. This is what the economists are feeling.
The interest rate hike is likely to increase the benchmark rate by 25 points. The economy was strong during the last quarter and the country has also seen better jobs. If the present state continues, the economists feel that the rate might be boosted a few times in 2018.
The Office of the Superintendent of Financial Institutions has made it stricter for uninsured mortgages. The banks have pushed up the five years and fixed mortgage rates as well.
The Canadian Real Estate Association has brought down the sales forecast. It is pegged at 5.3 percent drop nationwide and they expect 486,600 units to be sold in 2018.