Over the last ten years, Canadian mortgage rate fluctuations have had significant impacts on the Kelowna real estate market. This year we’ve already seen the Bank of Canada reduce mortgage rates twice, bringing the current overnight rate down to 4.5% – and it’s got a lot of people asking if now is the right time to buy, or whether they should sit tight and wait.

Now, while the answer to this relatively simple question doesn’t have a simple answer, it’s helpful to be mindful of what historical mortgage rate trends have taught us. Typically speaking, when mortgage rates are low, market activity increases due these lower lending costs. However, these low-rate markets can often bring rising prices due to a greater number of buyers looking to enter the market.

Nearly ten years ago, mortgage rates were considerably low – with the prime lending rate sitting at 2.7% – leading to a rapid rise in housing prices, demand, and foreign investment, particularly in the lower mainland. In an effort to curb this surge and stabilize the market, a 15% Foreign Buyers’ Tax was introduced in 2016 to discourage foreign investment in the lower mainland. In 2018, it was increased to 20%, while expanding to include Kelowna and the Fraser Valley, among other areas.

Having the intended effect, market activity and average prices became relatively stable for some time until 2020 when the COVID-19 pandemic came along, having dramatic effects on real estate markets worldwide. To stimulate the housing economy in these tumultuous times, the Bank of Canada drastically reduced mortgage lending rates, with some instances reaching historical lows of 2.79% for a 1-year fixed rate – the lowest mortgage interest rate in Canadian history. With many new buyers entering the market and the ‘working from home’ effect opening doors for many Canadians looking to relocate, we once again saw a significant rise in housing prices and buying activity, leading to one of the greatest real estate market surges we’ve seen in the Okanagan.

Fast-forward to today, and the Kelowna housing market is turning a new leaf. As mortgage rates begin to decrease and the combined effects of policy changes like short-term rental restrictions and new landlord regulations come into play, there’s a strong argument to be made for this being a great time to consider buying. Of course, the appealing possibility that rates will continue to decrease is not to be ruled out – but if the last ten years have taught us anything, it’s that low rates run the risk of increases in average prices and a lot of competition among buyers.

Curious about when to make your move in the market? There’s never been a better time to reach out. Let’s put our heads together to help you make the most informed decision for your investment in the Kelowna market.