First-time home buyers concerned about interest rate hike

In the community of Glace Bay, N.S., it's hard to find a house for sale.

Inventory is relatively low, as the housing market continues to surge in the Cape Breton Regional Municipality and the rest of the Maritimes.

“It is a very hot market now,” said Sydney realtor Valarie Sampson. “People are still looking for waterfront properties and they are coming from out of province.”

Some experts are predicting the housing market to slow down with the Bank of Canada raising its key interest rate, but Sampson doesn't see that happening.

“My heart really does go out to the first-time home buyers, and people who are trying to establish themselves. It's going to be really hard on them,” she said.

Those who already own a home, particularly anyone holding a variable-rate mortgage, can expect to see a direct impact on how much they're paying.

“That will affect them because interest rates going up means higher mortgage payments and people will have to postpone those big purchases,” said Cape Breton University business professor George Karaphillis.

He says paying down loans faster should be a priority for many right now.

“People went out and bought a lot of assets because the interest rates were low. People borrowed a lot to buy houses and that's one of the reasons the housing market is out of control, because the mortgage rates were so low for so long,” he said.

Karaphillis says the interest rate will continue to climb throughout the year, at least until the central bank's rate gets up to two per cent and possibly beyond.