What’s the connection between inflation and lower home prices?

Because Bank of Canada rates are used to control inflation, when these rates rise, mortgage interest rates rise as well. This makes getting a mortgage more difficult and more expensive. With potentially fewer buyers able to qualify and/or afford a mortgage, house sales can drop off, cooling the real estate market and causing home prices to fall.

Is it worth getting pre-approved for a mortgage when home prices keep changing?

Even in an unsettled market, it’s worth getting a mortgage pre-approval if you intend to search for a new home. Not only are pre-approvals free, they’re typically valid for 90-120 days, allowing you to lock in a specific interest rate. They’re also a great way to clarify the home price you can afford.

How can I keep my mortgage flexible until interest rates settle down?

One way to stay more in control of your mortgage is to choose a shorter term. Although a 5-year mortgage term is traditional, some lenders offer 1 to 4-year terms as well. By committing to a shorter term, you’ll have the opportunity to change your mortgage payment options that much sooner.

What’s the main difference between fixed and variable mortgage rates?

With a fixed mortgage rate, the amount of interest you pay (and therefore, each of your mortgage payments) stays the same for the duration of your term. With a variable mortgage rate, the amount of interest you pay changes in response to your lender’s fluctuating prime rate.

Leanne Armstrong, Author at Smarter Loans

Leanne Armstrong

Leanne Armstrong is a HubSpot-certified freelance content writer specializing in business, technology and finance. As a former entrepreneur with a background in accounting and social psychology, she writes for a wide range of globally recognized organizations. Her work has appeared in publications like Forbes, Huffington Post and CanadianSME Magazine.

Articles by Leanne Armstrong

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