The Bank of Canada raised rates today. Here’s what it means if you’re not selling.

By lunchtime you’ll have heard it a hundred times over. The Bank of Canada has hiked its key rate today for the first time in over three years. You’ll hear it on the radio, you’ll see it in your news feed, you’ll probably hear it at work. Most of the coverage is geared towards people who are either renewing a mortgage or looking to buy a home. If you own your home and aren’t planning to sell right now, the question you’re probably asking is: what does this actually mean for me?

Less than the headlines would have you believe. Today’s decision didn’t alter your home’s value overnight, and it’s certainly not an indication that you need to do anything. What it did, by a very small amount, was change how much the people who might one day buy your home can borrow. As you’ll see below, Edmonton home prices have actually moved considerably less than most people would expect even with a much larger rate change than this one.

What did the Bank actually do today?

The Bank of Canada raised its key interest rate by a quarter of a percentage point today, to 2.5%. It’s the first increase since July 2023. The Bank said it’s concerned that rising energy costs will push up prices more broadly, and that it may need to raise rates again. Higher rates make borrowing more expensive, which slows spending and helps keep prices in check.

The Bank doesn’t lend to homebuyers, though. Its rate reaches them through the big banks, which set their prime rate based on it. Prime is the base for variable-rate loans, including mortgages, so when the Bank moves its rate, the variable rates buyers are offered move too. After today, prime is expected to rise from 4.45% to 4.70% within days.

So for your future buyer, borrowing just got a little more expensive. For your home, nothing changed. Its value is what a buyer would pay for it, and that comes down to the home itself, where it is, and how many buyers want what you have. Today’s decision affects only how much they can borrow.

What does it do for the people who might end up buying my home?

When someone applies for a mortgage, the bank checks whether they could still afford their payments if rates went up by two percentage points. That’s the stress test. So when rates rise, the bar a buyer has to clear rises with them, and the most the bank will lend them drops.

In real terms, that’s not a lot at all. The typical home in the Greater Edmonton Area had a benchmark price of $423,100 in September, according to the REALTORS® Association of Edmonton. The benchmark price is an estimate of what a typical home sells for. Unlike an average, it isn’t skewed by which homes happened to sell that month, so it’s a better guide to what homes are actually worth. For a buyer putting down 20% on that home, today’s quarter point reduces the most they could offer by just under $10,000. (That’s assuming this morning’s average variable rate of 4.09%, according to WOWA, a 25-year amortization and no other debt.)

For you, that means the buyer for your home is still out there. Today’s increase only trims what they can offer by a small amount. If the Bank raises rates again, as it said it might, each further quarter point would have about the same effect.

Will this push prices down?

Rarely on its own, and Edmonton’s recent history shows why. Between March 2022 and July 2023, the Bank raised rates ten times, from 0.25% to 5%. Yet in September 2022, the number of homes sold in the Edmonton area was down 15.7% from a year earlier, while the benchmark price was still 2.2% higher, according to the REALTORS® Association of Edmonton. Prices did dip later in the period. Edmonton’s benchmark price averaged 4.2% lower in 2023 than in 2022, but by the end of that year it was rising again, according to ATB Financial.

Rates weren’t the only factor, since population growth and Alberta’s affordability also supported prices. But the pattern is clear: when rates change, it shows up mostly in how many homes sell, and much less in what they sell for. For you, that means today’s decision is far more likely to affect how quickly homes are selling than what yours is worth.

Why don’t I need to do anything about it?

The homeowners who actually have to respond to a decision like this are the ones who have already listed. Once a home is listed, it’s public, and the owner has committed to selling, so they’re selling to whichever buyers are around that month. If you’re not on a selling deadline, today is just information about your future buyers.

If anything is worth knowing, it’s not where rates go next. It’s the price you’d sell for, and whether there’s a buyer at that price. That’s why we built Windfal. A Windfal profile is a page for your home where you set that price. Agents with verified credentials and their buyers can find your home, and they’re the only ones who see your price. You can change your price or remove your profile at any time, and nothing in it commits you to selling.

By tonight, the headlines will have moved on. Your home will be the same home it was this morning, and the people who might one day buy it will still be looking. If you want to find out whether one of them is already out there at your price, you can set up a free profile at windfal.com.