Vancouver realtor says interest rate spike a big blow for first-time buyers

A Vancouver-based realtor says the Bank of Canada’s interest rate hike is a huge blow for first-time buyers in one of  the country's most expensive real estate markets. 

The 2.5 per cent rate hike is the biggest by the central bank in nearly 25 years.

Kate MacPhail says she had many clients of the verge of purchasing their first property, but this development will likely make that unattainable.

"There's just these sensitive segments of people who are going to try and squeak into a type of home, Once their buying power goes down, it's not enough for them anymore,” MacPhail, a member of Stilhavn Real Estate Services told CTV News.

Even with property values expected to drop, MacPhail says it won’t be enough to overcome the rate hike.

"If the interest rates go up by two per cent all of a sudden your monthly payments just skyrocketed by about $1,000 a month,”

“Even if this creates an overnight five per cent decrease in prices in the Vancouver real estate market it's not enough to cover the difference,” said MacPhail.

At this time last year a $500,000 mortgage at a 2.3 per cent fixed rate would cost $2190 per month.

Wednesday that same mortgage at 5.2 per cent would cost $2965.

A difference of $765 per month, and more than $9,300 per year.

The changes are also expected to put a serious decrease on demand, driving down prices across the country.

According to B.C. real estate statistics, sales in Greater Vancouver had already dropped nearly 36 per cent over the past year

MacPhail says this will now put serious pressure on those looking to sell.

"People who have properties that they need to sell, especially if they've already purchased, this now becomes extremely urgent if we're going to see a downturn in the market,”