What will happen to rates?

I stopped trying to predict rates recently and have accepted that the most important thing is to learn from the past, and from other economies. As such, when people ask me where are rates headed, I can only give a general guideline of what I see and hear – they are headed Upwards. By how much? When? What should I do? These questions are too personal to answer in a blog entry, but what I can say is that generally speaking a rising rate market will be healthy for Canadians. Too many buyers have over-leveredged themselves with mortgage debt, consumer debt, and have gotten too used to record-low rates.

One other important factor that I rarely, if ever hear being discussed is quality of life. When it comes to rising rates and making a decision whether buying a home is a good idea or not – too few people comment on the home for what it is: a base of family, of growth, and of bonding. It is a place we can relax in, a place we teach our children to read in, a place we host family dinners in. Rates – be they up or down – should not interfere with the bigger picture at hand. While they are crucial in planning a mortgage strategy – they are not and should not be the only deciding factor of when or if to buy, and too frequently I hear people making decisions based on rates and prices first, then the home itself. Just recently I heard someone say to me “I’ve been through so many bidding wars, I’m just going to get the next place no matter what”. It’s chilling to hear that.

My generation is used to the idea that real estate will always rise. Unfortunately it may not…

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