One good thing is happening to First-time homebuyers though

John Pasalis, president of Toronto-based brokerage Realosophy, says homebuyers won’t actually feel the impact of the Bank of Canada’s interest rate hike until the summer months.  That’s when many fixed mortgage rate contracts expire.

“A lot of these mortgage rate holds are going to be expiring in the next month or so, anyone buying in July and August is going to be buying based on these higher interest rates,” he said in a television interview. “We’re going to see how that will impact demand and how many buyers are still in the market because a lot have pulled out in the past couple of months.”

Zoocasa’s Lauren Haw said there has been a housing stalemate in the past few months. Many buyers and sellers are anticipating what the Bank of Canada will do next.

“The housing market pre-priced this rate hike and most people expected it, but what wasn’t expected was the signal of ongoing uncertainty around what rate decisions will look like in the coming months,” Haw said to Bloomberg.

“I think we are going to continue this stalemate into the summer. There’s a lot of confusion in the market with what a house is worth today and what it would look like once the sale is finalized.”

The Good Thing

One good thing is happening for first-time home buyers if you ask Pasalis. Higher interest rates may scare off some Canadians who are only buying houses as investments.

The Bank of Canada increased its benchmark interest rate by 50 basis points for the second time in a row on Wednesday, bringing it to 1.5 percent. After the rate increase, the biggest Canadian banks, such as TD, CIBC and RBC, also increased their prime borrowing rates by 50 basis points to 3.70 percent, effective June 2.

Canada’s housing market is already feeling the impact of the central bank’s aggressive rate hikes, with the benchmark price of a home dropping by 0.6% in April from March, marking the first drop in two years.