Interest rate pause good for housing market, realtors say
The Bank of Canada holding its key interest rate at 5 per cent is a glimmer of hope for those currently looking to buy or sell a home, experts say.
"I was happy to hear that it held," said Charlotte Leitch, an Arnprior-based broker with RE/MAX Absolute Realty.
"I'm hoping that's a sign that perhaps it's going to hold or go down."
Following two consecutive interest rate increases in June and July, Leitch says qualifying for a mortgage has been a struggle for buyers, especially since the government introduced stress-test rules, requiring buyers to qualify at two percent above the rate.
"Some of them have bit the bullet and bought down," she says. "So, they're buying lesser homes than they would have bought."
Arnprior homeowner Matthew Castiglia listed his home two and a half weeks ago, as he and his family look to move into Ottawa.
"It's daunting," Castiglia says, of buying and selling a home in the current market.
"At the beginning of the pandemic, interest rates were promised to be low for so long, and now they're not.
"To hear that they're held at least seems to kind of feel like a breath of fresh air, but it's certainly not a decrease."
The pause to interest rate hikes comes amid calls from multiple provincial premiers to the Bank of Canada for more affordability.
"I can't remember in living memory that the Bank of Canada or the governor raised rates 10 times in 18 months," said Ontario Premier Doug Ford. "If we don't see this stop, people will lose their homes."
Newfoundland and Labrador Premier Andrew Furey said, "Let's take a breather and take some time and see if these measures really had the impact that presumably they were designed to achieve."
RE/MAX broker Nancy Allen tells CTV News Ottawa that a hold on the key interest rate could be what's needed to kick-start the housing market heading into autumn.
"What a lot of buyers do is they do a 90- to 120-day rate hold. So that's going to spur on activity."
Mortgage agent Nick Hill says it is too early to tell if the rate hold will indicate a drop anytime soon.
"No one's predicting a drop in rates until probably early Q1, Q2 of 2025. We may be at this for the next year for the next several months, too early to tell."
Castiglia says that at this point his family might choose to rent rather than buy until interest rates come back down.
"That would be the calmer choice."
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