Investing in Real Estate

What to Expect for January Interest Rate Announcement in Canada and How it Will Impact Toronto Real Estate Market

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Are you eager to know what the January interest rate announcement in Canada has in store for you? You should because it will affect the buying and selling habits in the market. So if you are planning to buy a home in Toronto, you better be keen and listen to what will be announced. Even as you are busy looking around in the pre construction condos market, don’t forget about the January announcement. Here is what to expect for the January interest rate announcement in Canada and how it will impact Toronto real estate market.

Various sources indicate that the Bank of Canada will raise rates by about 25 basis points. Interest rates will therefore continue to be high. This means investors in the real estate sector will have to be prepared to dig deeper into their pockets. Higher interest rates have their pros and cons, which you will see below.

Pros of higher interest rates

  1. Lower housing prices

When the interest rates are high, finding houses selling at lower prices is not a surprise. The higher interest rates will make mortgages expensive; hence many buyers may not afford to take mortgages. When these buyers fail to obtain mortgages, they will not buy homes; hence the demand for housing will go low. When the demand is low, it means that many homes will not be sold. This will, in turn, make sellers reduce the prices to sell to the few buyers available. If they do not do so, then their homes will stay on the market for a very long time. This also applies in the case of pre construction homes. If you didn’t know, now you know.

  1. Less buyer risk

Less buyer risk is another benefit that you will enjoy when the interest rates are high. Higher interest rates will eliminate a lot of buyers from the market. The housing market will therefore be left with a few buyers who are not willing to compromise on anything. The few buyers available will always demand better quality. For instance, they will need to see an appraisal and inspection report before they commit to any deal. This will make sellers ensure that their homes are up to the required standard. Appraisal and inspection will therefore be conducted to make the buyer satisfied. So by the time the buyer is putting pen to paper, they will be sure of what they are buying. They will, therefore, not be prone to suffering higher risk, which might be the case if appraisal and inspection are not done. As a buyer, you will buy your preferred home with confidence. In the case of pre construction homes, you can always avoid risks by being keen at the inspection stage.

  1. A lot of homes are available

When interest rates are high, a lot of pre construction homes, new construction homes, and old homes will be available. These homes will be available in the market in plenty because few people are buying. There will be fewer buyers in the market because many of them have been eliminated by higher interest rates. This will leave a lot of home choices at your disposal. If you are so determined to buy, you will have a wide variety of homes to choose from. You will not be limited in any way compared to if there were few homes in the market.

Cons of higher interest rates

  1. High mortgage payments

When the interest rates are higher, you have to be prepared for high mortgage payments. This is one disadvantage of higher interest rates that you cannot avoid. The mortgage payments have to be high because the higher interest rates have to be taken care of.

  1. Slow economic growth

Higher interest rates can also lead to slow economic growth to some extent. When the rates are high, many people get discouraged from borrowing. When they don’t borrow, they’ll not invest; hence much will not be injected into the economy.

Benefits of investing in real estate

  1. Steady cash flow

Investing in real estate can be one sure way of realizing a steady cash flow. If you invest in rental property, you can be sure of getting steady cash. The tenants in your property will, of course, pay you every month. This will guarantee you income every month. You can depend on this kind of money at any given time because you are sure of receiving it. You can even begin by investing in a townhome. There are several pre construction townhomes that you can easily acquire and then rent once they are complete.

  1. Protection against inflation

Real estate investment is always considered a protection against inflation. When prices of commodities and services are going up, real estate investment can protect you against that. When everything is going up, it means also rent will go up. If you have invested in a rental property, you will be able to get more from the increased rental income. You will, therefore, not feel the pinch of inflation.

  1. Passive income

With a real estate investment, you can make passive income without much struggle. You can make money while sitting in the comfort of your home. If you buy a property and rent it, you will earn without working. You can even put management in place to ensure the needs of tenants are taken care of. What a good way of making money without working! You, too, can try it and see how well it goes.

  1. Long-term security

Real estate investments are always the best if you are looking for long-term security. This is a kind of investment that appreciates over time. This assures you that your investment will be safe for a longer time. If you need a nice retirement plan, you can try a hand at any of the pre construction homes around. The moment you buy, the value starts going up.


Be ready to take advantage of the situation in the market and get yourself a nice home. You can never miss finding pre construction condos that are within your budget. It is never too late to invest; therefore, wait no more. The city of Toronto will, of course, be the best destination for you. There is plenty in store for you here, and all you have to do is to come and buy a home.

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