What has the interest rate increase done to your purchasing power?

Let me give you the skinny on what happened yesterday with the, interest rate changes here in Canada.

Obviously, everybody knows, cuz everybody on TikTok and LinkedIn and Instagram and Facebook are all telling you that rates have gone up by half a point.

So here's the bottom line. The rate or the payment that you qualify for has not changed, obviously.

Okay? What you qualify for is a percentage of your income.

That's it. You can't change that unless your income changed. So if the point, if the interest rate went up by half a point, uh, the bottom line is you've lost basically 5% of your, uh, purchasing power.

I, the way on my calculations is, as for every quarter point that rates go up, you lose about two and a half percent.

Okay? So we're just under that. So I guess the good news for buyers is that your, your purchase price is gonna change if you're dealing with a seller that needs to sell.

They need to adjust to the marketplace, otherwise you're not gonna buy their property cuz you just plain don't qualify. So you're going to have to find a seller that's goingto cooperate to that.

So the good news is buyers, you get a better deal. Sellers bad news is, is you're not going to get as much money.

Now remember this buyers, purchase price is permanent.

Mortgage rates always change.

Remember that, take advantage of the market the way it is now because, uh, when interest rates go back down, you have locked in a price based on higher interest rates.

 

So this is good news for you, buyers and sellers. Hang in there. If you don't have to sell, hang on but if you do, you gotta take it on the chin.