It’s been making headlines nonstop: interest rates have been increasing very sharply, which has made lots of buyers fearful of what’s going to happen next.

Some buyers say they’re sure the market’s going to crash, since interest rates are going to go too high and nobody will be able to afford their homes.

However, if you ask us – we don’t think the market’s going to crash. Sure, the market is going to calm down, and we’re no longer going to have to bid $100,000 over asking to get a home.

However, that does not mean that we’re going to see a crash happen. We’re finally going to be in a position where we can go see a home twice if we want to. We can get a second opinion. We can negotiate the price. We’re starting to write offers below asking because there is less demand right now, and that’s only going to create opportunities.

The current five-year fixed rate is about 5%, and just over 5% for some banks. Some banks might offer lower rates, but that’s the trend right now, and we think it will continue to rise a little bit.

In terms of the variable rate, prime today is 3.7%, and they’re giving you a discount off of that – about 0.25% to 0.5% – depending on the institution. You can probably get a variable interest rate today for about 3.2%, or you can sign a five year fixed rate at about 5%.

In our opinion, it probably makes more sense to go with the variable rate right now. You still get some of the protection from the upside, and if rates come back down, you’re going to see some of those benefits as well.

We don’t necessarily think the 5% rate is sustainable for a five-year period in our current market. If the economy was booming and everything was going great, then yes, for sure! We could remain at 5% no problem. However, in the next 6 to 12 months, we predict an interest rate cooldown.

Want to know more about our interest rate predictions and how you should be approaching the current market? Reach out! Our team is always ready with tips, advice, and insights.