The cost of buying – February vs. today

Higher interest rates are impacting affordability. Multiple rate hikes over the last few months have caused a lot of stress and uncertainty – and have been instrumental in cooling demand and bringing down property prices. 

While lower prices may sound great, higher rates kind of cancel them out for now: you’ll have similar monthly costs with an $800K property bought at today’s borrowing rate as you would have had with a $1M home purchased in January or February. 

There is one positive in all of this however: while your monthly costs are the same, having a lower initial price tag means you’ll need less of a down payment and you’ll pay less in land transfer taxes. So you could get into a property that was out of your range 8 months ago – or you’ll be able to put a higher percentage down and pay less interest over the life of your mortgage. 

Check out this chart, created by mortgage broker James Harrison, to see a breakdown of the numbers: 

Here’s what James is recommending to his own clients right now: 

“Go with a short-term fixed or variable mortgage to weather short-term increases for the next 6-18 months. As we have seen time and time again, nothing lasts forever, and what goes up must come down.” 

Want to discuss how interest rates and the shifting market could impact your real estate plans? Get in touch, I’m always happy to help. 

Please note that this does not constitute financial advice. Your best bet is to talk to your lender or mortgage broker to find out what the best options are for you.