{"id":959,"date":"2022-01-14T15:56:11","date_gmt":"2022-01-14T15:56:11","guid":{"rendered":"https:\/\/effortlessmortgage.ca\/blogs\/?p=959"},"modified":"2022-01-14T22:24:29","modified_gmt":"2022-01-14T22:24:29","slug":"what-does-500-rate-increase-2022-mean-to-home-prices-and-mortgage","status":"publish","type":"post","link":"https:\/\/effortlessmortgage.ca\/blogs\/what-does-500-rate-increase-2022-mean-to-home-prices-and-mortgage\/","title":{"rendered":"What Does a 500% Rate Increase in 2022 Mean to Home Prices and Your Mortgage?"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"959\" class=\"elementor elementor-959\" data-elementor-post-type=\"post\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-2633ce2a elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"2633ce2a\" data-element_type=\"section\" data-e-type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-62118e2b\" data-id=\"62118e2b\" data-element_type=\"column\" data-e-type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-62dced2a elementor-widget elementor-widget-text-editor\" data-id=\"62dced2a\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><\/p>\n<p><img fetchpriority=\"high\" decoding=\"async\" class=\"aligncenter wp-image-961 size-full\" src=\"https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2022\/01\/housing-market-2022-min.png\" alt=\"\" width=\"2240\" height=\"1260\" data-wp-editing=\"1\" srcset=\"https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2022\/01\/housing-market-2022-min.png 2240w, https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2022\/01\/housing-market-2022-min-300x169.png 300w, https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2022\/01\/housing-market-2022-min-1024x576.png 1024w, https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2022\/01\/housing-market-2022-min-768x432.png 768w, https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2022\/01\/housing-market-2022-min-1536x864.png 1536w, https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2022\/01\/housing-market-2022-min-2048x1152.png 2048w\" sizes=\"(max-width: 2240px) 100vw, 2240px\" \/><\/p>\n<p><\/p>\n<h2 class=\"wp-block-heading\"><strong>Bank of Canada rate is expected to increase by 500% in 2022.&nbsp;<\/strong><\/h2>\n<h4><b>What does that mean to your mortgage?<\/b><\/h4>\n<p><\/p>\n<p><span style=\"color: var( --e-global-color-text ); font-family: var( --e-global-typography-text-font-family ), Sans-serif; font-weight: var( --e-global-typography-text-font-weight );\">The market is expecting Bank of Canada to increase the overnight rate 5 times in 0.25% increment this year to combat inflation.&nbsp;<\/span><\/p>\n<p><span style=\"color: var( --e-global-color-text ); font-family: var( --e-global-typography-text-font-family ), Sans-serif; font-weight: var( --e-global-typography-text-font-weight );\">5 times sounds scary, but let\u2019s break it down. The current overnight rate is at 0.25%, which is very low.&nbsp;<\/span><\/p>\n<p><span style=\"color: var( --e-global-color-text ); font-family: var( --e-global-typography-text-font-family ), Sans-serif; font-weight: var( --e-global-typography-text-font-weight );\">After 5 increases, it will be at 1.5%. <u>Only 1.25% higher\u2026 not too bad<\/u>!<\/span><\/p>\n<h4><b>What does it mean for your mortgage? <\/b><\/h4>\n<ul>\n<li><u><b>If you currently have a fixed mortgage<\/b><\/u> &#8211; your rate is locked in so nothing to worry about until renewal. Keep in mind, if you funded your mortgage in the last 4 years, you were likely qualified through the new \u201cmortgage stress test\u201d. It means there\u2019s at least 2% buffer built into your mortgage to ensure your income is enough to carry a higher mortgage payment should the rate increase.<\/li>\n<li><u><b>If you currently have a variable mortgage<\/b><\/u> &#8211; lenders may increase the Prime Rate following the Bank of Canada rate hikes, which may in turn increase your variable rate. With some lenders, <b>your monthly mortgage payment will Not Change<\/b>, and they simply allocate more of it to Interest vs. Principle.<\/li>\n<li><b><u>If you are looking for a mortgage<\/u> <\/b>&#8211; it\u2019s time to put in an application and lock in your rate!<\/li>\n<\/ul>\n<p><\/p>\n<p><\/p>\n<p><\/p>\n<p><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-0758920 elementor-widget elementor-widget-image\" data-id=\"0758920\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"image.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<img decoding=\"async\" width=\"797\" height=\"380\" src=\"https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2022\/01\/Screen-Shot-2022-01-14-at-8.22.39-AM.png\" class=\"attachment-large size-large wp-image-962\" alt=\"\" srcset=\"https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2022\/01\/Screen-Shot-2022-01-14-at-8.22.39-AM.png 797w, https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2022\/01\/Screen-Shot-2022-01-14-at-8.22.39-AM-300x143.png 300w, https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2022\/01\/Screen-Shot-2022-01-14-at-8.22.39-AM-768x366.png 768w\" sizes=\"(max-width: 797px) 100vw, 797px\" \/>\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-8d51131 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"8d51131\" data-element_type=\"section\" data-e-type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-5c82fe9\" data-id=\"5c82fe9\" data-element_type=\"column\" data-e-type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-178fe21 elementor-widget elementor-widget-text-editor\" data-id=\"178fe21\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<h4><span style=\"color: var( --e-global-color-text ); font-family: var( --e-global-typography-text-font-family ), Sans-serif;\"><b>So which one is better? Fixed or Variable?<\/b><\/span><\/h4>\n<p>We don\u2019t have a crystal ball, but in our opinion, variable is still the better option.\u00a0<\/p>\n<p>Currently, variable rates are at 1.1%-1.3% and fixed rates are at 2.5%-2.8% for bank lenders.\u00a0<\/p>\n<p>Even if the variable rate increases by 1.25% in 2022, it will still be slightly lower than fixed, and you would have saved 1% over the one year period.<\/p>\n<h4 style=\"font-family: 'Circular Std', sans-serif; color: #1d293f;\"><b>What does this mean for the housing market?<\/b><\/h4>\n<p>If we are in a \u201cbalanced\u201d housing market with equal amount of demand and supply, when interest rate goes up, home prices will go down. But we are no where near a balanced market.<\/p>\n<p>The low inventory and tight demand conditions are everywhere &#8211; in both bigger and smaller markets in Ontario.\u00a0<\/p>\n<p>The sales-to-new listing ratio is a great indicator of the supply-demand situations.\u00a0<\/p>\n<p>If the market is at 0.6% it is considered \u201cbalanced\u201d. Higher numbers means it\u2019s a sellers\u2019 market.\u00a0<\/p>\n<p>As of the end of last year, the Sales-to-New Listing ratio is at 0.77% across Canada and 0.73% at Toronto, meaning we are still deep in the sellers\u2019 market.<\/p>\n<h4><b>Economists expect this tight supply-demand condition to last well into 2022<\/b><\/h4>\n<p>This will likely counter the impact of higher interest rate, and continue to put upward pressure on home prices.<\/p>\n<p>The bottom line is that despite home price fluctuations, over the long run, real estate is still one of the safest investments to help you build wealth.\u00a0<\/p>\n<h4><b>Like what they say, \u201cTime in the market beats Timing the market\u201d<\/b><\/h4>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-feb4391 elementor-widget-divider--view-line elementor-widget elementor-widget-divider\" data-id=\"feb4391\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"divider.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-divider\">\n\t\t\t<span class=\"elementor-divider-separator\">\n\t\t\t\t\t\t<\/span>\n\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-d03aefd elementor-widget elementor-widget-text-editor\" data-id=\"d03aefd\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<h4 style=\"font-family: 'Circular Std', sans-serif; color: #1d293f;\"><strong><span style=\"font-size: 18px;\">If you would like to understand how will this impact your plan to get a new mortgage or refinance your current mortgage, give us a call.\u00a0<\/span><\/strong><\/h4>\n<p style=\"font-family: 'Circular Std', sans-serif; color: #1d293f;\"><strong><span style=\"font-size: 18px;\">We\u2019d love to help.<\/span><\/strong><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-1a006f9 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"1a006f9\" data-element_type=\"section\" data-e-type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-8e464b2\" data-id=\"8e464b2\" data-element_type=\"column\" data-e-type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-80272e2 elementor-widget elementor-widget-heading\" data-id=\"80272e2\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">Let's Chat<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-9dbe432 elementor-widget elementor-widget-text-editor\" data-id=\"9dbe432\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>Our Effortless Mortgage Advisors are always here to help 7 days a week.\u00a0<\/p>\n<p>Book a 15-minute chat with us to learn more how we can help you support and\/or grow your client base.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-cb013aa elementor-widget elementor-widget-image\" data-id=\"cb013aa\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"image.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a href=\"https:\/\/calendly.com\/mortgage-advisors\/partner-referral?month=2021-10\" target=\"_blank\" rel=\"noopener\">\n\t\t\t\t\t\t\t<img decoding=\"async\" width=\"364\" height=\"113\" src=\"https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2021\/07\/Book-a-15-Min-Call.png\" class=\"attachment-large size-large wp-image-806\" alt=\"Book-a-15-Min-Call\" srcset=\"https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2021\/07\/Book-a-15-Min-Call.png 364w, https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2021\/07\/Book-a-15-Min-Call-300x93.png 300w\" sizes=\"(max-width: 364px) 100vw, 364px\" \/>\t\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>Bank of Canada rate is expected to increase by 500% in 2022.&nbsp; What does that mean to your mortgage? The market is expecting Bank of Canada to increase the overnight rate 5 times in 0.25% increment this year to combat inflation.&nbsp; 5 times sounds scary, but let&rsquo;s break it down. The current overnight rate is [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":961,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9,46,1,43,45,8],"tags":[],"table_tags":[],"class_list":["post-959","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mortgage-basics","category-home-purchase","category-news","category-mortgage-options","category-mortgage-refinance","category-home-refinancing"],"_links":{"self":[{"href":"https:\/\/effortlessmortgage.ca\/blogs\/wp-json\/wp\/v2\/posts\/959","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/effortlessmortgage.ca\/blogs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/effortlessmortgage.ca\/blogs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/effortlessmortgage.ca\/blogs\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/effortlessmortgage.ca\/blogs\/wp-json\/wp\/v2\/comments?post=959"}],"version-history":[{"count":32,"href":"https:\/\/effortlessmortgage.ca\/blogs\/wp-json\/wp\/v2\/posts\/959\/revisions"}],"predecessor-version":[{"id":994,"href":"https:\/\/effortlessmortgage.ca\/blogs\/wp-json\/wp\/v2\/posts\/959\/revisions\/994"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/effortlessmortgage.ca\/blogs\/wp-json\/wp\/v2\/media\/961"}],"wp:attachment":[{"href":"https:\/\/effortlessmortgage.ca\/blogs\/wp-json\/wp\/v2\/media?parent=959"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/effortlessmortgage.ca\/blogs\/wp-json\/wp\/v2\/categories?post=959"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/effortlessmortgage.ca\/blogs\/wp-json\/wp\/v2\/tags?post=959"},{"taxonomy":"table_tags","embeddable":true,"href":"https:\/\/effortlessmortgage.ca\/blogs\/wp-json\/wp\/v2\/table_tags?post=959"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}