Housing affordability could become strained here in Calgary if interest rates go up. According to the newest BMO Fall Home Buying Report, 58% of Calgarians said that a rise of 2% in interest rates would make housing less affordable for them. In Alberta, 65% felt the same way.
In Vancouver, 74% of those surveyed also felt that rising interest rates of 2% would strain affordability. In Toronto, 66% felt this way and nationally the percentage was 67%.
The BMO report also notes that the strain would be felt the worst in Vancouver. About 22% of potential home buyers wouldn't be able to enter the housing market. In Calgary, only 9% would have to cancel their plans to buy a home if interest rates were to rise.
Before making any type of home purchase you need to make sure that you'll be able to afford a higher interest rate. Usually it takes months or even years to put together the down payment required to purchase a condo, townhouse, duplex or a single-family home. By the time you're ready to buy, interest rates may rise and you may need to restructure your plans.
If you're in the midst of saving up for a new home, make sure that you take the potential of rising rates into account when you make your financial plan. Figure out how much you'll need to have for the down payment and how much you'll be able to afford monthly should the rates rise in the upcoming months. This way, you'll have a firm grasp of the time period involved to secure a new house without having to worry about the shock of higher rates or the disappointment of having to wait longer before making your house purchase.