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Feb. 01, 2021 | Mario Toneguzzi

Rock-bottom interest rates throughout 2021 could nudge even more Calgarians into the housing market

Historically low interest rates are helping boost the residential real estate market in Calgary and across the country, with the trend expected to continue throughout 2021.

"The decline in interest rates since last spring gave a sizable break to buyers by lowering debt service costs. This has undoubtedly attracted more buyers into the market," said Robert Hogue, senior economist with RBC Economics, in a recent report on the Canadian housing market.

"We expect interest rates to stay low though we see long-term rates starting to creep slightly higher this year. It's important to remember that when rates are at rock-bottom levels like they are today, it doesn't take much of an increase to jack up debt service costs."

For now, those low rates have been one of the key factors increasing demand from prospective homebuyers.
"I definitely think that the low interest rates have spurred people on, but I think just truly spending more time in their houses has made people sit back and go, 'Do I really like where I am?'" - Cheryl Tackaberry, TD mobile mortgage specialist team

"What's interesting is that the discounted rates that are being offered now are far lower than what we saw in that 2007 period. Because the Bank of Canada has committed, or at least publicly stated, that they intend to keep rates low for a longer period of time, mortgage rates have come down significantly over the past little while and the discounted rates on top of whatever is posted have also been very significant," said CREB® chief economist Ann-Marie Lurie.

"So, now you're seeing very low rates and I think that is driving a lot of people back into the market who, to a certain extent, were pushed out over the past couple of years when rates increased."

Lurie says the rates are expected to remain low for the foreseeable future. Today, variable mortgage rates are as low as one per cent.

Cheryl Tackaberry, a Calgary-based district manager with the TD mobile mortgage specialist team, said people look at the attractiveness of the low interest rates and understand their payments are going to be low and they can afford more within their budget.

"I definitely think that the low interest rates have spurred people on, but I think just truly spending more time in their houses has made people sit back and go, 'Do I really like where I am? I'm spending so much time in this house now and I need to upsize because I now want a home office, or I want this, or I want that.' And the low interest rates are definitely having an impact on that," she said.

"But the thing people have to remember is that even though interest rates are low, a bank qualifies somebody on a higher interest rate. So, they still have that affordability piece in our requirement because interest rates will not always be this low. We have to know that five years from now, somebody is going to be able to afford their payment at potentially a higher interest rate."

Tagged: affordability | buyers | Calgary | Calgary Real Estate | Calgary Real Estate News | Calgary Real Estate News | Canada | COVID-19 | CREB | CREB Chief Economist Ann Marie Lurie | Debt | economist | Economy | Economy | Feature | Homebuyer | Housing Market | Housing Market | Interest Rates | Mortgage | Mortgage Rates | Rates | RBC Economics | TD Canada Trust

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CREB® acknowledges that its office is located, and that its REALTOR® members serve, on the traditional territories of the peoples of the Treaty 7 region and Métis Nation of Alberta, Region 3. We honour and acknowledge the members of the Métis community and specifically, the Métis Nation Region 3. In the spirit of reconciliation and because we are all treaty people, we also acknowledge all Calgarians who make our homes in the traditional Treaty 7 territory of Southern Alberta.

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