I believe we are at the beginning of a shift in the Vancouver housing market. I’d like to provide you with an update with what we’re noticing in the Mortgage market and how this will likely affect Vancouver housing market.

• Since September 2021 Canada’s 5-yr bond yields have increased from 1.59% to 2.28%. This has increased the 5-yr fixed mortgage from Septembers lows of 2.09% to 3.89%! (Yes, the banks are making a killing right now on the spread). In the last month alone we’ve seen the 5-yr fixed increase by 0.75%.
• The rates are finally at a level now where our stress-test rules will effect how much someone qualifies for. The stress-test rule dictates the borrower must qualify for a mortgage at either 5.25%, or the Mortgage Rate + 2%, whichever is greater. Qualifying someone at 5.89% will decrease their purchasing power, and this will likely trickle down into the house prices.

Personal Opinion: As people’s pre-approvals expire in April-May they will need to re-qualify using a higher stress-test rate, and will end up qualifying for less than expected. This will likely soften housing prices in Vancouver.

• I believe we will see the greatest affects in prices over 1-million, since the changes the interest rates have the most affect on the larger loan sizes, and because these homes require a down-payment of at least 20%.
• I anticipate the condo market (under-1 million) will remain strong due to excessive housing demand, but it is likely we will begin seeing properties selling at their asking price with a  full list of subjects. 
• RBC put this out a couple of weeks ago: https://thoughtleadership.rbc.com/a-turning-point-more-sellers-enter-canadas-housing-market-in-february/
• Signing up for a 5-year fixed mortgage is a risk, we are seeing some of the highest interest rates in over 15 years! Is this just a short-term spike or are these excessive rates here to stay? Since markets tend to operate in waves, I am leaning towards these rates will be here for the next 18-24 months, similar to how long our ultra low-rates lasted for.  The 2-yr and 3-yr fixed rates are priced significantly lower than the 5-yr fixed.