A house with a sold real estate sign in a neighbourhood of Ottawa on April 17, 2023. The real estate industry believes that a possible rate cut on Wednesday would encourage buyers to wade back in.A Bank of Canada interest rate cut could give Canada’s slow housing market a jolt, as prospective buyers gain confidence that borrowing costs are on the decline.
“We’ve had multiple homebuyers tell us that they’re waiting for the Bank of Canada to drop rates before they start their search,” she said. However, one rate cut won’t do much to lower mortgage payments, and any relief could be offset if a flood of demand pushes up house prices. That’s more of a problem for new homebuyers than people already in the market who are looking to move.
Indeed, mortgage rates may fall less than many are anticipating, said Beata Caranci, chief economist at Toronto-Dominion Bank. “People are thinking, ‘Hey, they’ll start cutting and I’ll lock into these great three- and five-year rates.’ But there’s not going to be much movement there,” Ms. Caranci said. “It is not as if everything starts to move down, especially if the Bank of Canada is moving at a gradual pace, because there’s not a whole repricing of the curve that happens.”