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As interest rates have skyrocketed since 2022, many homeowners and aspiring homeowners have seen their situation worsen, reports TVA News.

Homeowners with an adjustable-rate mortgage saw their payments double or the amortization term increase by 10 or 15 years.

“We have never talked so much about the key rate. In 2023, you need to know what that means if you are in the real estate market because it directly affects your actions. It was an element to constantly monitor for those who were buying or those who wanted to renew their mortgage,” explains Mélanie Bergeron, real estate broker, in an interview with TVA Nouvelles.

However, the Bank of Canada only increased its key rate by 0.75 percentage points this year, underlines Stéphane Bruyère, mortgage broker at Mortgage Architects, also in an interview with TVA Nouvelles.

“The story of 2023 is the realization that the real effects of 2022 have begun. What we suffered in 2023 is the impact of the increases from the Bank of Canada in 2022,” he illustrates.

It was in 2022 that the central bank increased its rate from 0.25% to 4.25%. However, the impacts take a long time to be felt, 12 to 18 months later.

“We’ve been saying for a long time that this is going to happen and hit hard, but we started to experience it hard in 2023. The credit lines that have gone up, the mortgages, and the people who are starting to slow down their consumption because they are starting to worry,” adds Mr. Bruyère.

While prices generally remained the same, those of some properties decreased because sellers wanted to sell quickly. But in 2023, the market remained in favor of sellers.

“It was a return to pre-pandemic, to normality. After two years of launching left and right with excessive prices and often above their budget, people have started to take their time again and to shop around, to analyze what it is really worth,” observes Ms. Bergeront

“But we have not seen in 2023 the turnaround in the situation that many anticipate and the drop in prices that would accompany it. The seller still gets off very well, even if he has to negotiate a little more,” she added.

In the rental market, rents have exploded by 13.7% in just one year in Quebec, according to information compiled by the Regroupement of housing committees and tenant associations of Quebec (RCLALQ).

Added to this is the drop in construction starts. During the first six months of 2023, they fell by 58% in Greater Montreal compared to the same period the previous year.

With many homeowners due to renew their loans in 2024, monthly payments are likely to explode, given that rates are much higher than they were. “We can therefore predict the return to an active market, which will calibrate the current serious imbalance between supply and demand,” believes Philippe Lecoq, president of the Proprio Direct banner, in an interview with TVA Nouvelles.

2024-01-06 02:03:09
#interest #rates #hurt #Quebecers