Everyone loves to talk about interest rates. Every time the Bank of Canada makes an announcement, the headlines light up: “Rates up again!” or “Cuts finally coming!” But here’s the thing: interest rates alone don’t tell you whether it’s actually a good time to buy.
Let’s talk about the part most people miss: how prices, rates, and monthly payments all interact.
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🏡 The Real Math of Affordability
When interest rates are high, most buyers pull back, which usually puts downward pressure on prices.
When rates drop, demand heats up again, and prices tend to climb.
It’s a constant push and pull between the two.
So while a lower rate feels better, it doesn’t always mean your monthly cost will be lower.
Here’s a simple example:
• In 2022, a $1,000,000 home at a 1.9% interest rate would have cost roughly $3,600 per month.
• In 2024 or 2025, that same home might cost $850,000, but at a 5.5% rate the payment jumps to around $4,600 per month.
Even though the home price dropped by $150,000, the higher rate made the monthly payment increase.
But the reverse is also true. If rates drop again while prices stay lower, affordability improves fast.
For example:
• That same $850,000 home at a 3.5% rate would be about $3,800 per month.
So a buyer who purchased during a slower market at a good price could actually end up paying less overall once rates drop and they refinance.
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🔁 You Can Change Your Rate, Not the Price You Paid
A key mindset shift for buyers:
You can always refinance your mortgage when rates fall, but you can’t go back and re-buy your home for less.
Buying during a quieter market (like now) often means:
• Less competition and stress
• More room to negotiate
• The chance to lock in a lower price and refinance later
In other words: today’s rate isn’t forever, but today’s price might be.
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🧠 The Bottom Line
Affordability is about balance, not just rates. If you focus only on interest rates, you might miss great opportunities while everyone else is waiting for “the perfect time.”
If you’re curious how the math looks for your specific budget, I can break it down and show you what your monthly payment might look like now versus if rates dropped or prices rose again. Sometimes seeing the numbers side by side makes things a lot clearer.
