Home Loans The increase in mortgages is being felt in the Lac-Saint-Jean real estate market

The increase in mortgages is being felt in the Lac-Saint-Jean real estate market

The increase in mortgages is being felt in the Lac-Saint-Jean real estate market

The successive increases in the Bank of Canada policy rate have had an impact on the real estate market in Lac-Saint-Jean. Although buyers are still numerous, a slowdown in demand is starting to be felt across the region.

From January to October 2022, the key rate increased from 0.25% to 3.75% in Canada. A measure aimed at curbing consumption to fight inflation in the country.

This increase was immediately reflected in interest rates on mortgage loans from financial institutions, which were significantly higher than on the same date last year. “We went from 2% to 6% in no time,” says Louise Boulanger, estate agent for Remax in MRC Domaine-du-Roy.

Thus, “new buyers don’t have the opportunity to be pre-approved at 1%, 2% or 3%. So it slows them down. They don’t have the same borrowing capacity,” adds Louise Lajoie, estate agent for Remax in MRC Lac-Saint-Jean-Est .

What’s more, while buyers see their borrowing capacity decrease, they face a market where home prices remain relatively high.

Louise Boulanger and Valérie Campion, estate agents for Remax in MRC Maria-Chapdelaine, also agree that the property market has experienced a slowdown in their respective sectors since the summer.

According to Valérie Campion, the increase in mortgages has led to a change in attitude among both buyers and sellers.

“First-time buyers think they will wait for prices to fall. Whereas those who wanted to sell to buy back may prefer to wait because they are currently telling themselves that they would sell in a market where prices is slightly worse and that they will have to buy back at a higher rate. »

Price stability after all

Moreover, if the increase in mortgage rates usually translates into a decrease in house prices, this is not quite the case in Lac-Saint-Jean.

“Before, in Saguenay-Lac-Saint-Jean, houses were really, really cheap, they were below market price. In recent years, we’ve had an adjustment in housing prices, so it’s not going down because it’s only just adjusted. It is not like in the big cities, where oversupply had caused property prices to explode,” explains Louise Boulanger.

Given the increase in the cost of materials and labor, she adds, the price of existing houses would therefore simply have reached a reasonable threshold.

Louise Lajoie and Valérie Campion observe a similar phenomenon in their territory. So far, the decline in property prices there is still marginal. Many homes will continue to sell for more than their appraisal.

In addition, everywhere in Lac-Saint-Jean, demand continues to exceed supply, which contributes to the phenomenon of scarcity and thus to maintaining prices.

Buyers will have to be more patient

The increase in mortgage rates, combined with prices that remain high, quickly cooled some buyers in Lac-Saint-Jean. But many people still want to buy a property there.

à“Buyers, we have them and they are serious. It is not because their rate is 4% or 5% that they withdraw. They will find the right home, they just have to be more patient,” says Louise Lajoie.

On the Domaine-du-Roy site, Louise Boulanger notes that the buyers are still there, but increasingly choosing “beautiful, good, cheap” type houses.

For her part, Valérie Campion mentions that “it is still a very good time to sell in the Dolbeau-Mistassini sector. Home buyers, there are still many of them. There are still people leaving the big cities to come to more distant areas. And there are also many companies looking for properties to house their immigrant employees.”

No or few repossessions of properties

In addition, Louise Boulanger says that few homeowners will be forced to sell their home because of the increase in their payments, even among those whose mortgages are variable rate or who are renewing.

“It doesn’t scare me at all. The purpose of financial institutions is not to prey on people, it wouldn’t be to their advantage. What people want to do with financial institutions is maybe keep the same period but extend the years. Financial institutions have everything to gain by helping their customers get through this period.”

In Lac-Saint-Jean-Est, however, Louise Lajoie expects that the number of homes taken over will increase slightly.

She argues that “it’s not just the higher rates that put people in a precarious situation, but the fact that it’s on top of inflation. There are people who could have taken an increase of $150 or $250 a month, but with inflation on top of that, it becomes more difficult. No one could have predicted that we would have to pay $7 for a salad.”


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