Can a single rate cut make waves in Canada’s housing market? What to know

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Interest Rate ニュース

Bank Of Canada,Home Prices,Housing Market

The Bank of Canada's 25-basis-point rate cut might have a 'marginal' impact on affordability, but it's the 'psychological' impact on the housing market that experts are watching.

The Bank of Canada lowered its key interest rate on Wednesday. Caryn Lieberman looks at how this could impact borrowing and house hunting.cut its key policy rate, which informs the rates Canadians pay on loans like mortgages, by 25 basis points to 4.75 per cent.

“If you were nowhere close to qualifying for a home, you’re not going to qualify still,” he says, noting that some qualified buyers might be able to afford a little bit more than they would have previously. “If you’re on a variable-rate mortgage you’re going to see an impact relatively soon; if you’re on a fixed, it might take a little bit more time,” Parsons says.Fixed-rate mortgages are indirectly tied to the Bank of Canada’s policy rate through the bond market. The rate on the popular five-year fixed mortgage, for instance, is tied to the five-year government of Canada bond yield. Prices here are set on expectations for where the central bank’s key rate is heading over the next five years.

“When rates are going up, you don’t know how long it’s going to last. That’s not a very good environment for homebuyers,” he says. “The rate cut provides them certainty and confidence they didn’t have before.”Calgary issues ‘critical water supply’ alert after water main break spurs boil water advisory

“I would imagine there could be some people who go, ‘You know what, I feel comfortable purchasing a place now and maybe closing in August or the end of July,’ where they think there’s going to be another rate cut,” she says.showed more than half of would-be homebuyers polled had put their search on pause amid the Bank of Canada rate hike cycle.

 

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