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Higher interest rates are not just dampening demand among first-time buyers as a new study shows that investors too may be feeling the squeeze.
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The recent report by RatesDotCA — an online marketplace for mortgages — examined queries for mortgage quotes for all property types in October finding those from would-be investors fell by 60 per cent from September.
The report further noted that September marked the peak for inquiries among this group of borrowers.
The study also revealed that the biggest decline among queries for mortgages was among borrowers seeking to purchase vacation properties, falling by 64 per cent. Meanwhile, requests for mortgage quotes for primary residences dropped by 59 per cent in October from September.
Overall, the number of people requesting new purchase mortgages fell 60 per cent while refinancing and renewals declined by only 51 per cent month over month.
The report further noted that declines for all inquiries for mortgages likely dropped last month as a result of the sixth Bank of Canada overnight rate hike — 50 basis points — that took place in early October.
The RatesDotCA report also revealed that quotes for fixed mortgages in October slightly outpaced those for variable rates for the first time since March. One reason for the rise in interest, it suggested, was an uptick in quotes for short-term, fixed mortgages. It further added that some borrowers may be gravitating to these short-term mortgages, seeking to ride out near-term interest rate volatility and then renew at a later date for a five-year term at a lower interest rate.