The Bank of Canada held its July interest rate meeting a few weeks ago and made the decision to increase interest rates a further 0.25%. This brings the banks key interest rate up to 1.50%. This was widely expected, given that the economy continues to grow at a record pace. Unemployment is at the lowest we’ve seen since the 1970s and wages continue to grow. Inflation isn’t out of control yet, but it is meeting the targets that the Bank of Canada wanted to see in order to continue raising its rates.

The Bank of Canada is in the process of normalizing interest rates after bringing them down to almost 0 during the recession — and, of course, bringing them down again in 2015, when we had the oil crisis. We are now lifting ourselves out of that, which also entails bringing rates to normal levels. Interest rates are still approximately half of what they should be based on the strength of the economy.

Low interest rates stimulate the economy. When rates are held down too long, however, it’s possible for spending to get out of control. Money is cheap and people borrow too much. Housing prices accelerate faster than they should because people are able to buy more. That’s not to say housing prices wouldn’t go up regardless, but it adds fuel to the fire. Even commodities are impacted: Stock market runs occur because people have more money to play with, and that pushes the market ever higher.

There is additionally some worry about NAFTA, steel tariffs, and auto tariffs. According to the Bank of Canada, these uncertainties were factored into the decision-making process. Normally I release an interest rate update after every meeting, but I decided to wait as they reported that some data would be released in the coming weeks. These numbers have been released since and Canada’s economy is performing even better than the Bank of Canada expected.

It now looks like the Canadian economy may grow by 3% in the 2nd half, more than was initially predicted. Retail numbers are better than expected, stock market numbers are higher than we expected, and real estate is moving forward. Consequently, we are probably looking at another interest rate increase come October, bringing us up to 1.75%. If things continue on this current path, we’re probably looking at another two to three rate increases next year.

Somewhere between that 2.5% and 3.0% is where the key interest rate should be. They aren’t going to race to raise rates because everyone wants to see growth, but rates will go up. The question is just how quickly they will increase.

The fundamentals are all showing that interest rates will continue to rise this year, at least one more time. Buyers, if you’re holding out for increased affordability, it’s not happening. Interest rates are going up. They could double from where they are currently over the next 12 to 24 months. If you’ve read our latest July update, or any of our updates over the last 12 months, real estate values continue to rise as well.

I would challenge all buyers to get into the market. It’s not about what you’re buying, it’s just about getting into the market at all. It’s about buying a condo, a townhouse, or just looking for your needs versus your wants. It’s about understanding there’s more to owning a home than all the bells and whistles. Sacrifice is important, saving is important, and getting into the market is important.

I mentioned this in my latest interview on CH Morning Live: It’s all about a series of steps. Things are going back to the way they were. My parents saved their pennies, they were responsible, they moved into a rental apartment, and they continued to save. They bought their first little entry-level property and they worked their way up over the course of two to three properties until getting to the home that they were comfortable setting down in. That’s the way we need to approach the process in 2018.

Again, I challenge buyers to get into the market. Sellers, there’s no rush to sell your home. Values are continuing to rise. But interest rates are continuing to rise, too, which is also putting some downward pressure on buyers. If you’re thinking about selling your home in the next few years, it makes sense to revisit the idea of selling while buyers still have more buying power.

We will see how things play out over the next couple of months between now and the next interest rate meeting, but right now all signs are pointing to an increase in October of this year, to end the year at 1.75%. Both buyers and sellers should be thinking about how they want to approach the market.