The frenzy in Nanaimo’s Old Town tattoo parlor on Wednesday was about the pain of rising interest rates.
“It’s crazy,” said Joel Lee, owner of old town tattoo.
“Absolutely. Every little bit hurts,” said Robin Titterton, a tattooed Victoria resident.
Titterton was getting flowers tattooed on her arm in honor of her children, and Victoria’s mother worried about how they could afford to own a home in this booming market.
“For all the young people coming into the market, I really don’t know how they could afford it. I could never afford my house right now. Like I can’t buy my house right now,” Titterton said.
From Wednesday, owners of variable mortgages will face higher monthly payments for the first time since 2018, and are warned that the Bank of Canada’s 0.25% to 0.5% increase will be one of many to come.
Tattoo artist Joel Lee bought his Nanaimo home for $100,000 more than the asking price last year and said many of his clients in their 20s were considering buying vans to live in.
“A lot of them tell me their plan is to buy a sprinter or a pickup truck they can live in. Because they know they can’t afford a house,” Lee said.
According to mortgage broker Nolan Smith, he still recommends variable rate mortgages despite rising rates.
“It will affect people’s payments, but for every $100,000 you borrow, it’s only an increase of $12 a month, so it’s not a crazy jump, but there are others for sure,” said Nolan Smith, owner of Oceanvale Mortgage and Financing.
The interest rate hike was intended to rein in spending and ultimately reduce inflation in Canada. But experts in the Vancouver Island real estate market, where supply is low and demand is high, expect it will only drive prices up.
“Unfortunately, we expect many interest rate increases in 2022. Our problem is our housing supply. We simply do not have enough houses to meet the demand. We are about 25,000 houses short in British Columbia to serve the 64,000 people looking for a home,” said Kelly O’Dwyer, incoming chair of the Vancouver Island Real Estate Board.
Which, in the short term, means house prices will likely continue to rise, even if interest rates rise.