The numbers are in and they’re confirming speculation that rising rates pushed fence-sitters into the market, with GTA sales alone skyrocketed 21 per cent in August.
“I definitely noticed an uptick in sales; our bank of rate holds was stagnant the month prior and people thought it was a lot of doom and gloom with rates appearing to go nowhere,” Justin Blacklock of TMG The Mortgage Group - Averbach Mortgages told MortgageBrokerNews.ca. “In August, and even before August, people became more motivated to buy. “
Overshadowing the GTA’s impressive end of summer sales surge – perhaps surprisingly to some – are sales in Blacklock’s Vancouver market where year-over-year numbers increased 52 per cent over the same month last year.
Blacklock believes the surge was due in large part to the slight increase in interest rates – rates he still believes are quite good.
“It is certainly a motivating factor, psychologically,” he said. “Rates are still historically low -- they have gone up, but it’s still affordable.”
Buyers may be overvaluing the importance of rate when buying a new home. Surges – like the one seen in August – have a way of driving house prices up as well; forcing buyers to overpay and essentially lose any savings they may have made on the low rate.
“Sometimes clients look to get into a hot market when the rate is low and they have to overpay for the house, which costs them money in the long run,” Blacklock said. “Would you rather buy a property you aren’t crazy about just because you got a rate of 2.99?”
However, it may be a good time for clients to lock in a good rate while they search for the perfect home.
“Rate shouldn’t be the determining factor for when they buy; they should visit a broker and lock a rate in so that when they want to buy, they will end up with the right place at the right time,” Blacklock said.