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Canada real estate transactions: Rates rise, growth stalls

The cost of borrowing is rising in the country. No doubt real estate transactions in Alberta will be affected by the hike in interest rates. The Bank of Canada rate is hovering just below 4 per cent -- that's up almost 16 per cent from the same time last year and 32 per cent from two years ago. That change may affect a person's decision about whether to buy at this time.

What the rate change actually means is that borrowers are paying nearly 16 per cent more interest to borrow the same amount. The rate was lowest two years ago at 3 per cent. Some prospective purchasers may put off their homebuying plans in the hopes interest rates fall. Experts say that could be a possibility; however, it's more likely that the Bank of Canada adopts a neutral rate policy.

The rising bank rate could also have the opposite effect. Potential borrowers may fear interest rates will escalate further and choose to buy now in case that happens. In any case, a variable interest rate may be the best bet. Homeowners who have a variable rate now may want to plan on spending more on servicing costs. 

Time will tell how the interest rates will impact real estate transactions. On the upside, Alberta is still one of the most affordable provinces in which to purchase property. Purchasers who are planning on home shopping now might want to get the advice of an experienced real estate lawyer who understands the legal aspects of homebuying and selling and also how market fluctuations affect his or her clients. 

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