Prospective home-buyers should ensure they are still qualified for the mortgages they have been pre-approved for, said one mortgage broker, after interest rates were pushed higher Wednesday.
“If you were qualified several weeks ago, you need to be very conscious of this, and you need to make sure you get pre-approved again,” said mortgage broker Leah Zlatkin, ofLowestRates.ca.
“You likely have to re-qualify for a property that you would have been pre-approved for a mortgage on.”
With rates pushed up by 1% on Wednesday – higher than the expected .75% hike – people considering jumping into the real estate market need to do their homework.
“It’s been busy with the announcement today. We’ve got a lot of clients calling. But most people were expecting this,” Zlatkin said.
“We notified some clients ahead of time, so that alleviates some of the panicked calls.”
With inflation pushing 8%, the Bank of Canada is raising interest rates to cool demand for goods and services.
It’s a move Zlatkin said could eventually benefit the housing market by bringing long-term stability.
“I think it’s more a ‘ripping-the-Band-Aid-off’ scenario,” she said of the significant hike by the central bank.
“I think they should have done this. I think this is a better solution than dragging it out and gradually increasing rates.”
Credit counsellors, meanwhile, say they have seen an increase in Canadians seeking help with finances.
“It’s starting to squeeze them. So yes our members, our credit counsellors are seeing more people,” said Stacy Yanchuk Oleksy, CEO of Credit Counselling Canada.
She said the rise in the price of everything from doughnuts to debt is taking a toll on people.
“If you’ve got a variable mortgage rate, and you’re seeing your mortgage payment goes up by $100 or $200 or even more, that’s money you’ve got to pull away from the rest of your budget,” said Oleksy.
With inflation hovering around at a 40-year high, the Bank of Canada said “things are not normal.”
It is signalled another hike is coming in September.
“How high our policy rate needs to go will depend on how the economy and inflation evolves,” said Governor Tiff Macklem Wednesday.
“By front-loading interest rate increases now, we are trying to avoid the need for even higher interest rates down the road.”
The Bank of Canada’s next decision comes Sept. 7.
The next snapshot of the pain of inflation is July 20.
slaurie@postmedia.com
@_ScottLaurie
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