Bank of Canada has cut its overnight lending rate by 25 basis points to 4.5%, marking the second consecutive rate cut this year.
The Bank reports Canadian economy growth is above long-term potential, with weakness in household consumption and housing, and softening labor market. Growth expected to increase in 2025.
Royal LePage Real Estate Services Ltd. COO, Karen Yolevski, predicts a boost in housing market activity in the fall.
- Yolevski suggests that the Bank of Canada’s second cut to the overnight lending rate and decreasing mortgage qualification thresholds may encourage sidelined buyers to return to the housing market.
- Yolevski predicts a slight boost in short-term activity and robust buyer demand in the fall.
- Inventory building in major markets provides more options for buyers, potentially encouraging more re-entry.
Home Sales Recovery Post-June Rate Cut
- Zoocasa reports a decrease in non-seasonally-adjusted national sales by 10.9% from May to June, and GTA and Metro Vancouver sales by over 10%.
- The Canadian Real Estate Association adjusted its annual housing market forecast to 6.2% growth from 10.5% in April.
- Excess inventory levels are evident, with active listings up 67.4% year-over-year in June.
- A recent survey shows home prices as the main concern for buyers, followed by interest rates and economic uncertainty.
- Re/Max Canada president, Christopher Alexander, sees the Bank of Canada’s decision to decrease its key interest rate as positive news for Canadian homebuyers.
Good News for Commercial Real Estate
- Avison Young’s Mark Fieder predicts rate drop will boost investor sentiment.
- Improved return metrics in CRE expected to fuel investor appetite.
- Second rate drop indicates Bank’s confidence in inflation data and shift into a different interest rate regime.
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