Slowly rising interest rates may add some volatility, but the vaccine rollout – and its promise of an eventual end to the pandemic – is fuelling optimism among condo investors. So are rising house prices in the suburbs.
Compare that to the fall market, which was loaded with condos as investors looked to sell units left empty by tenants moving out of the downtown core, and as international students stayed home to study remotely, Morrison says. Some Airbnb owners were also looking to sell as the city changed its rules for short-term rentals.
That said, she doesn’t see it lasting: “I do think things can start petering off in May or June because interest rates have slowly creeped up.” Rates for conventional five-year fixed-rate mortgages at the major banks were all above two per cent as of March 22, according to ratespy.com. Any change to the historically low mortgage rates, however minor, can have a big effect on the market, says Calum Ross, principal advisor with The Mortgage Management Group.
At this time last year, fixed and variable rates were very close, but the spread between them will widen as the fixed rate rises, which will lead more buyers to choose the variable option, Ross says.Article content Although no one can predict with certainty when and how quickly interest rates will go up, Ross says that once the Bank of Canada begins to move back toward pre-pandemic interest rates in the next 12 to 18 months – a process that could take as long as three to five years to complete – buyers, lenders and realtors alike should expect mortgage borrowing and real estate activity to slow down.