Ottawa real estate industry watching anticipated interest rate cut closely
There’s anticipation of a further rate cut from the Bank of Canada this week due to plummeting inflation and back-to-back interest rate cuts this year.
Forecasters said this week they expect the Bank to speed up the pace of interest rate cuts and lower its policy rate by half a percentage point this week.
Those in the Ottawa real estate industry say they are watching closely to see the impact on the local market.
"I think Canadians and economists would be extremely disappointed if governor Tiff Macklem did anything less than half a percentage point this time around. Listen, they were really aggressive at raising interest rates when inflation was at eight and even per cent and now it’s at 1.6 per cent," said Frank Napolitano of Mortgage Brokers Ottawa.
The September inflation rate is down to 1.6 per cent, below the Bank of Canada’s 2 per cent inflation target. The Bank has lowered its key interest rate three times, bringing it down to 4.25 per cent.
"I think Canadians have a lot to be happy about moving forward when it comes to interest rates. You know, we got to think about the fact that we're hitting the five year anniversary of the pandemic and of course, the pandemic also spell ultra low interest rates. So we're going to see a lot of Canadians have their mortgage come up for renewal in the summer and fall that locked in at 1.5 per cent in 2020," said Napolitano.
After the Bank of Canada's interest rate cut last month, governor Tiff Macklem signalled that the central bank will be ready to cut rates more aggressively if inflation falls by too much.
"I think in general, we're hoping for a further rate cut," said Geoff Walker, a real estate agent with Re/Max Walker Real Estate Group.
"I know there's discussions this time that the rate cut might be as much as half a point, which I do think is really needed. In the housing market specifically, we're certainly seeing inventory build, which arguably becomes longer for time to sell."
Recent statistics from Ratehub.ca found the income required to purchase a new home in Ottawa has dropped approximately $6,000 since the spring, as interest rates declined.
Homebuyers needed an average income of $126,100 in September to buy the average priced home for sale in Ottawa, down from $127,830 in August. In May, the average income required to buy a home in Ottawa was $132,060.
With files from The Canadian Press and CTV's Josh Pringle
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