On April 10 2024, the Bank of Canada announced that they were holding the overnight interest rate at 5%. Like many Canadians, you may be waiting for interest rates to drop before making your move in the housing market. If you’ve been following the real estate market long enough, you have almost certainly heard the phrase “Marry the house, date the rate”. At its core, this piece of advice encourages potential home buyers to prioritize finding their dream home over fixating on getting the lowest possible interest rate on their mortgage. But does this strategy make sense?
Historically, when interest rates rise, fewer buyers qualify for mortgages and demand tends to soften. As a result, home prices tend to come down. While you'll pay more interest on your mortgage, you may be buying the home itself at a discount.
Imagine a home that sold for $800,000 when mortgage rates were very low. After interest rates rise, that same home might be worth $680,000. Your monthly mortgage payment would be higher because you're borrowing at a higher rate, but you're financing a much smaller purchase price.
In other words, you may pay more to borrow the money, but you're borrowing less money in the first place.
That's the logic behind "marry the house, date the rate." The idea is that if you find the right home at the right price, you can always refinance or renew your mortgage later if rates come down. What you can't do is go back and buy that same home at yesterday's price.
This strategy is not without its risks. First, mortgage rates may not come down as expected. If you can't comfortably afford mortgage payments at today's interest rates, this strategy probably isn't the right fit for you. Second, if you don’t plan to stay in the home long term, the costs associated with refinancing may make this strategy less affordable. Of course, you should always seek the advice of a professional mortgage broker, as they will be able to help determine what strategy will work best for you. If you would like to be put in touch with one of my trusted mortgage broker partners, I would be happy to connect you!
"Marry the house, date the rate" is a real estate expression that encourages buyers to focus on finding the right home rather than waiting for the perfect mortgage rate. The idea is that mortgage rates can change over time through refinancing or renewal, but you may not get another opportunity to purchase the same home at the same price.
Not necessarily, but higher interest rates often reduce buyer demand, which can put downward pressure on home prices. In some cases, buyers may be able to purchase a home for less than they would have when rates were lower. The right time to buy depends on your finances, long-term plans, and ability to comfortably afford the payments.
Historically, rising interest rates tend to reduce affordability and buyer demand, which can slow price growth or cause prices to decline. However, real estate markets are influenced by many factors, including housing supply, population growth, employment, and consumer confidence.
In many cases, yes. Homeowners may be able to refinance their mortgage or renew at a lower rate when their term expires. Before refinancing, it's important to understand any penalties, fees, or restrictions that may apply.
Waiting for lower rates may improve affordability, but it could also mean facing more competition from other buyers if demand increases. No one can predict future interest rates with certainty, so the better question is whether you can comfortably afford the home and mortgage today.
The biggest risk is that interest rates may not fall as expected. Buyers who purchase at today's rates should be comfortable carrying their mortgage even if rates remain elevated. This strategy generally works best for buyers who plan to stay in the home for several years.
Generally, the longer you plan to own the property, the more likely you are to benefit from potential appreciation and future refinancing opportunities. Buyers who expect to move again within a few years may find that transaction costs reduce the benefits of this approach.
Mortgage rates directly impact your monthly payment and borrowing power. As rates rise, buyers typically qualify for smaller mortgages. As rates fall, buyers can often afford larger loan amounts, which may increase competition and put upward pressure on home prices.