Higher interest rate has more people looking for less home

Some people in Saskatchewan may be taking a look at interest rates and re-evaluating their home-buying plans.

On Wednesday, the Bank of Canada chose to keep its trend-setting interest rate steady at five per cent, but that’s still higher than it’s been in more than a decade.

That interest rate is having an effect on the housing market in Saskatchewan, though Saskatchewan Realtors Association president Chris Guérette said the exact effect can be hard to pin down.

“It’s hard to quantify that because Saskatchewan is still a relatively resilient market compared to the other provinces and to other large centres in the country,” she explained.

In August, Saskatchewan home sales saw the busiest season going into a September since 2007. Guérette couldn’t say if sales would have been even higher if interest rates were lower.

“There are definitely some buyers out there and they’re far more patient than they were three to five years ago because there’s not a lot of inventory out there, so it takes a lot more time to find something that suits your needs,” Guérette said.

But she also said more people have re-evaluated what they can spend and are looking in that range as well, in the more affordable range below $400,000.

“They have to think about how to get a mortgage that fits their needs but also how to find a home that fits their needs now, and within their budget,” she said. “What they were maybe looking at buying two years ago looks very different than what they’re buying today because that price difference is significant.”

There’s also less inventory in the sub-$400,000 range. Guérette said people may be looking to ride out their locked-in lower mortgage rate before selling, buying, and taking on something more expensive.

“If they can hold on, if they’re currently in a mortgage and they just want to wait that through, that’s what people are waiting to do – so they’re not adding more inventory to the market,” said Guérette.

The entire province has lower inventory right now. Guérette said Saskatchewan as a whole is at about four months worth, while Regina is at three and Saskatoon below two. She said it’s considered

a healthy market at around six months of housing inventory on the market.

The Bank of Canada kept the door open to more interest rate hikes later on while it watched the inflation rate to see if previous hikes will have more of an effect.

— With files from The Canadian Press