In maintaining its key interest rate at 5 per cent, the Bank of Canada signals a beacon of optimism for potential home sellers and buyers, according to industry experts. Charlotte Leitch, a broker with RE/MAX Absolute Realty based in Arnprior, expressed relief at the status quo, voicing hope for either stabilization or a downward shift.
The decision comes on the heels of two successive interest rate hikes in June and July, moves that Leitch notes have complicated mortgage qualifications for potential buyers. This has been particularly noticeable since the introduction of stress-test rules by the government, necessitating buyers to qualify at rates two percent higher than the current offering.
Many buyers, under this strain, have chosen to “bite the bullet”, purchasing properties lesser than what they originally anticipated, says Leitch.
Opinions on the ground reiterate her sentiments. Arnprior homeowner Matthew Castiglia, having listed his home two and a half weeks ago in anticipation of a move to Ottawa, confessed to the process being challenging. Despite initial low-interest-rate assurances amidst the pandemic, the stark reality of the current market has been a jolt. Confirmation of the rate being held, though far from a decrease, feels akin to a whiff of fresh air, Castiglia added.
Increasing voices urging for economic relief have influenced the pause in interest rate hikes. Among them, Ontario Premier Doug Ford voiced concern over the unprecedented ten rate rises in a span of 18 months, cautioning that continued hikes could lead to residents losing homes. Joining him was Newfoundland and Labrador Premier Andrew Furey, who recommended a temporary pause to evaluate the effectiveness of the given measures.
RE/MAX broker Nancy Allen echoed these sentiments to CTV News Ottawa, indicating that the holding of the key interest rate might provide the necessary stimulus to jolt the stagnant housing market as autumn approaches.
However, mortgage agent Nick Hill cautioned that it was too soon to anticipate the indication of a rate drop. Stating that predictions of a drop in rates are not expected until early 2025, he remained hesitant about drawing hasty conclusions.
Reflecting the apprehension, Castiglia shared that his family might opt to rent rather than buy until a noticeable decrease in interest rates is observed, labeling it a “calmer choice.”