It’s not surprising that, in an Ipsos Public Affairs survey, 81% of Canadians said they were concerned that rising interest rates and inflation will continue to make it difficult to afford essentials and to pay off their debt. It is understandable that many first-time home buyers are reticent about taking on the debt of homeownership.
One of the primary concerns when interest rates rise is the impact on affordability. Higher interest rates may lead to increased monthly mortgage payments, potentially affecting the purchasing power of homebuyers. It's important to reassess your budget and ensure that you can comfortably manage higher mortgage payments.
Working with your mortgage specialist at Northern Birch will help you understand the financial implications of rising interest rates and make informed decisions.
Locking in your Mortgage
By locking in your rate, you can have peace of mind knowing that your mortgage payments will remain stable
If you are considering your first mortgage or refinancing your home, you may want to consider choosing a fixed rate, securing an interest rate at the time of application and protecting you from potential rate increases during the mortgage approval process. By locking in your rate, you can have peace of mind knowing that your mortgage payments will remain stable, even if rates continue to rise.
Exploring Mortgage Options
When interest rates increase, it's crucial to explore various mortgage options to find the best fit for your financial situation. Different mortgage products, such as fixed-rate mortgages and variable-rate mortgages, offer distinct advantages. Fixed-rate mortgages provide stability with a consistent interest rate over the loan term, while variable-rate mortgages offer rates that adjust periodically as the prime rate fluctuates. Discussing the options with your Northern Birch mortgage specialist helps you understand the pros and cons of each option to help you reach your financial goals.
Improving Your “Creditworthiness”
In a rising interest rate environment, it becomes even more important to enhance the strength of your credit score. Lenders often offer more favourable terms and interest rates to borrowers with strong credit profiles. Take steps to improve your credit score by paying bills on time, reducing debt, and maintaining a low credit utilization ratio. A higher credit score can potentially help you secure a mortgage at a more competitive rate.
Will Interest Rates Continue to Rise?
Despite rising interest rates, homeownership is attainable…
We do not have a crystal ball and cannot predict the future. Economists tend to agree that current rates will stabilize but may not go down in the near future. Keeping in touch with your Northern Birch loans specialist keeps you abreast of opportunities to invest and/or borrow and current products that will help you reach your financial goals.
Despite rising interest rates, homeownership is attainable, and with the right approach, you can make your dreams of owning a home a reality. Contact us for more information and to discuss your borrowing options!
