As first-time homebuyers navigate the mortgage process, there is a lot to learn. Last week, the Bank of Canada increased their benchmark interest rate to 1.5%.
This hike in interest rate comes a couple of months after the initial 0.5% increase. The interest rate before the pandemic was 1.75% and was decreased to 0.25% after the pandemic to help the economy.
As per CBC News, “Nathan Janzen, an economist with RBC, thinks Canada’s central bank is on track for a series of larger-than-normal hikes in a row, until its rate gets to roughly three per cent. Canada’s benchmark interest rate hasn’t hit that level since the 2008 financial crisis.”
Source: CBC News; Chart: Pete Evans, Source: Statistics Canada
How it affects buyers
While increased interest rates lower consumer prices, and home prices—they increase mortgage rates.
This has led some new homebuyers to put homeownership on the backburner. But for some, homeownership is more urgent.
Many want to put down roots in a community and ensure that there is no risk of them having to move. They want their kids to have consistency, go to the same school throughout their educational years and be able to have the same classmates.
Others are looking for more privacy. They might have a newborn who is up all night and don’t want to be ‘that neighbour’.
Even home décor could be a motivating factor. When you rent, you may not have the opportunity to paint the walls, or change the flooring. With homeownership, you don’t have to get anyone else’s approval—you can just go for it!
In some cases, the underwriter requests additional documentation from the potential homeowner. Items like a bank statement showing a portion of a credit card was paid off are common requests.
Once the underwriter has everything, the review process takes approximately 72 hours before the potential homeowner receives an approval for the mortgage.
A path to homeownership
EP Homes offers a Bridge to Own™ program that offers homebuyers with good credit the opportunity to be homeowners with no down payment.
All payments consist of monthly rent + a savings component. At the end of the term, the savings you’ve accumulated will become your down payment. Other programs often ask that you have a portion of the down payment before you begin your homeownership journey.
Our program also offers complimentary credit coaching to all clients. Helping you establish healthy financial habits to get you mortgage ready is very important to us.
We want to help guide you through your path to homeownership and understand that every client is different. Our lease terms are flexible ranging from 1 to 3 years to accommodate different client journeys.
Our mission is to help as many everyday people become their best financial selves as homeowners with good credit and no down payment. Do you know someone who would be a great fit for EP Homes’ Bridge to Own™ program?
Well we have a referral program! For any colleague, friend, or family member that completes an application and is approved* for the program and moves in, you will qualify for $1,000*.
*more details here: https://ephomes.ca/referrals/