OTTAWA - With many Canadian homeowners facing a sharp rise in mortgage payments, many of them have decided to bail, resulting in the highest number of Toronto housing units for sale in more than a decade and signaling a big drop in prices in the coming months.
But those mortgages are now coming up for renewal in an interest rate environment starkly different than it was five years ago. Mortgage rates are sharply higher, although the Bank of Canada has recently started to guide them down. At the same time, many are also reluctant to lower asking prices and book losses on their investment, he said, at least for now."There's just limited willingness to lose money," said Daniel Foch, director of economic research at RARE Real Estate. "It seems like nobody has really adjusted their expectations to a market in which they aren't going to make a profit," he said.
The Bank of Canada's next rate decision comes on July 24 with a majority of economists expecting another cut of 25 basis points in the overnight rate. Last month, it trimmed the benchmark rate to 4.75% from 5% for the first time in four years.