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Mortgage Rates Are On The Rise: Should You Buy a Home Now or Wait?


The end of 2021 showed a surge in the real estate market, and now mortgage rates are on the rise. When there is a change in Canadian mortgage rates, is it better to buy a new home now or wait and see what happens? While there’s no one-size-fits-all answer to this question, there are some factors to consider. 

What Should You Know About Mortgage Rates?

When you buy a home, your mortgage rate is the interest charged on the mortgage. The lender sets the interest rate, and you can opt into a fixed or variable rate. A fixed-rate means that you’re opting into one set rate for typically five years. Variable rates fluctuate based on the Bank of Canada’s rates in combination with your lender. Mortgage rates will be a bit lower if you have an incredible credit score as well. 

What Can We Expect in 2022 for Canadian Mortgage Rates?

While mortgage rates are low at the beginning of the year, the Bank of Canada has indicated that they will be increasing rates several times this year. Rates will increase by a quarter of a percentage each time, but higher rates are definitely on the horizon. With this knowledge, many people are looking to buy and sell their properties now, so what is the best gameplan for Canadian home buyers?

Fixed Versus Variable Mortgages

With increasing interest rates, locking into a fixed-term mortgage rate might be a better option for you financially. While we can’t know what interest rates will look like in three to five years’ time, we do know that the Bank of Canada will be hiking up the rates for the remainder of 2022. 

Should You Buy a Home Now or Wait?

Like most things in life, you can’t perfectly time the real estate market. If you’re ready to purchase a new home now, you should do so before the mortgage rates increase if you’re looking for a fixed-rate mortgage. Rising rates may push more buyers into the market who are becoming aggressive with their offers, increasing competition even more. 

Mortgage rates are a serious consideration when you’re buying a home, as they directly impact your mortgage payment every month. Everyone is looking to decrease their bills, so ensuring you can get the best rate possible is a goal for most home buyers. 

Typically, the winter months can be an ideal time if you’re a homebuyer because there’s less competition since many people don’t want to move in the winter. Spring will likely be the time when the most inventory is on the market, and you’ll have more options. Fall and Summer are similar to Spring. However, with the real estate market the way it has been since the beginning of 2020, it has stepped outside the average trends we see. 

The best financial decision could be jumping on the opportunity to have a lower mortgage rate for a fixed-rate mortgage. The only thing that you’ll have to worry about is the low inventory in most major markets in Canada. 

Especially in BC and Ontario, low inventory numbers continue to plague the markets, resulting in bidding wars. It’s a great time to sell a home, but you will have to work strategically as a buyer. 

Each situation is different, so if you’re ready to purchase a home, it’s best to speak to a mortgage broker and realtor to determine the best route for your circumstances. 

Real estate professional Jordan Scarpino from West Coast Real Estate Hub says, “Waiting for mortgage rates to increase only means that you’ll end up paying more in the long run. While interest rates are still low, it’s time to jump on buying or selling your home and getting you into your dream property.” 

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