Major interest rate cut expected to shift Metro Vancouver real estate market
The Bank of Canada has lowered its key interest rate by half a percentage point.
The super-sized cut is expected to bring relief to many Canadians struggling with affordability.
It’s a bold move from the Bank of Canada with the key lending rate now sitting at 3.75 per cent.
The cut is the fourth rate cut in a row by the central bank as inflation dropped from 2.7 per cent in June to 1.6 per cent in September.
The central bank says its job has now shifted from lowering inflation, to maintaining it around its two per cent target.
“All this suggests we are back to low inflation. This is good news for Canadians. Now, our focus is to maintain low stable inflation. We need to stick the landing,” said Bank of Canada governor Tiff Macklem.
He says it's going to take a while longer for Canadians to feel the effects on the price of food, rent and housing. However, relief will be felt by mortgage-holders, borrowers, and first-time homebuyers fairly quickly.
“This is great news for anybody who's got a variable rate mortgage right now," said Leah Zlatkin, licensed mortgage broker and LowestRates.ca expert.
"What this means is that for every $100,000 in mortgage money that you've currently borrowed, you're actually looking at a (monthly) decrease of $29.96, so for a lot of homeowners, that's going to feel like a big relief."
Zlatkin says this is an opportune moment for buyers to make their move.
“It is currently a buyer's market. You need to get in before everyone else does. For those people who are sitting on the fence, you want to certainly get in before them. A lot of these fence-sitters will be getting off that fence in Q1 of 2025 and it's better to be in a market where there's less competition,” she told CTV News.
Sky-high prices in Metro Vancouver are one of the biggest deterrents for buyers.
“I don't expect much movement in home prices for the balance of 2024. Any appreciation that'll take place will likely happen in the first half to the back half of 2025,” said Adil Dinani, a real estate agent with Royal LePage.
Dinani says it’s important to remain prudent in this market.
“Just because rates are coming down doesn't mean it's a buy signal. It does mean, however, that there's more affordability coming in the market, and generally, with more affordability means more activity and more sales, so certainly a good time to start dipping your toe and discovering what options are available out there,” he said.
Macklem says more cuts to the key interest rate can be expected as long as the economy evolves in line with the central bank's forecast.
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