(Image Credit: CFJC News)

By Sydney Chisholm

Real Estate

High interest rates, good time to buy: Kamloops mortgage broker

Jan 4, 2023 | 4:36 PM

KAMLOOPS – Rising interest rates have many with variable interest rates and those needing to renegotiate mortgages wondering how they will make ends meet. While some in the industry are worried for first-time home buyers, a Kamloops mortgage broker believes now is the time to buy.

In December, the Bank of Canada raised its key rate from 3.5 per cent to 4.25 per cent in an attempt to rein in inflation.

This seventh consecutive increase puts Canadian interest rates at their highest level since 2008.

“If somebody bought a home and they have a variable rate, then it is going to be changing. As these rate increases have happened, their payment has been going up substantially,” Aaron Krausert, a realtor at RE/MAX Real Estate told CFJC News. “I know some people who are paying $1,000 more than their original payment amount.”

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This increase has been followed by a slow softening of real estate prices in Kamloops, as many buyers aren’t able to spend as much on a house. As a result, more expensive houses are much harder to sell.

“People’s buying power has decreased, essentially,” Krausert explained.

However, Travis Colman, a mortgage broker at Colman & Associates, sees it as an opportunity to get a better deal on your new home

“You’re going to get a good opportunity to save a few bucks on a house compared to where it was six or eight months ago,” he said.

For people buying a new home, Colman suggests taking a shorter-term deal for fixed rates, meaning you might miss the higher rates to come while still having the option to reassess in a year or two.

“As much as people think that interest rates are scary, I think it really is the best time to buy that we will see in a long time,” Colman said

The decline of house prices means many homeowners are losing equity, which Krausert said will hit first-time buyers who purchased their homes at the peak of the market the hardest.

“They scraped together their five per cent and if values change, it could easily drop below that 5 per cent and they don’t have that equity in the house,” the realtor said.

According to the Bank of Canada, the next bank rate announcement will be on Jan. 25.