'There seems to be optimism': The impact of interest rate cuts in Ottawa
It's the news many in the nation's capital had been waiting for.
For the first time in more than four years, the Bank of Canada has cut its overnight rate by 25 basis points from 5 per cent to 4.75 per cent.
It's a move that many had been expecting for several months, as Canada's inflation rate has remained under three per cent since January.
"I wouldn't say I'm surprised. There were mixed feelings out there as to whether it was going to happen or not," said Ottawa realtor and leader of the RE/MAX Tulip Team. "I'd say it's good news in the long run. People who have been looking for this relief for a while."
Although a dip of 25 basis points doesn't translate into massive savings for anyone dealing with a variable rate mortgage, those who are closely monitoring the situation expect this to see more cuts in the months ahead.
"Prime minus one is what most banks were offering on a variable rate, which was 6.1 per cent and now it's 5.95 per cent," said Meyer.
"So, you're really looking at about $15 on a $100,000 mortgage. With the average mortgage being about $500,000, the average person is going to be saving about $75 a month. It's something, but I think the biggest effect is the psychological effect of people now saying 'okay, rates are going to come down.'"
With the expectation that rates will continue to drop in the coming months, Meyer says his team has been busy fielding calls from people looking to get into the market, which will in turn drive up the price of homes.
"We already have low inventory, so if more buyers are a little more buoyed by the news and get into the market, we're going to see that tighten the market even further from an inventory point of view, which will cause prices to go up," he said.
- Sign up now for daily CTV News Ottawa newsletters
- The information you need to know, sent directly to you: Download the CTV News App
That line of thinking is exactly why J.P. Davidson, who is looking to purchase his first home, says he doesn't want to see interest rates continue to decline.
"I think that interest rates were artificially low for so long that they should be higher," said Davidson.
"Where the rates are now is a more accurate reflection of where they should have been for longer."
Davidson says he knows a lot of people around the same age as him, in their late 20s, who purchased homes they realistically couldn't afford when rates were low and who are now in a difficult position.
"The rates should stay high and therefore reward people who are actually saving money rather than allow people access to cheap debt, which is what's causing a lot of these problems with housing," he said.
"I rent right now. Not by choice, in the sense that I would like to buy, but because I don't feel comfortable basically putting all my life savings and getting help from my parents to buy a house, I'm waiting."
Many others in Ottawa, like Kelsey McMahon, say the Bank of Canada's decision to cut its key rate brings about a feeling of cautious optimism.
"We're actually up for renewing our mortgage in October so this is a good sign for me," said McMahon.
"It's a quarter of a per cent and so it's hard to get too pumped up about that but it's a move in the right direction so that's good to know."
The good news for those in a similar situation to McMahon, there is a sense from industry watchers that Wednesday's cut s just the beginning.
"If you look at the professional forecasts coming out from the major lenders, TD, BMO, RBC, universally they're predicting that there's going to be more rate cuts. By the end of 2025 we might be down to 3 per cent, we might be below 3 per cent," said Adams.
"I look at [forecasters] from all of the Bay St. banks and certainly, there seems to be optimism that this is the beginning of maybe four or five rate cuts. We'll have to wait and see."
Adam Jacobs, head of research at Colliers Canada, says he believes we have seen some of the unintended consequences of rock-bottom interest rates and despite the expectation of future cuts this year, he doesn't expect to get back to those pre-pandemic rates.
"We're living with some of that now in terms of how much the cost of materials went up, how unaffordable housing became and I'm not sure people want to repeat that," he said.
"It would be very surprising to me if rates got back to that basically free money level at any time in the next five to ten years."
The next interest rate announcement from the Bank of Canada is scheduled for July 24.
CTVNews.ca Top Stories
Police arrest Toronto woman in connection with three recent homicides
Police have arrested a Toronto woman in connection with three recent homicides and investigators say that they believe two of the victims may have been 'randomly targeted.'
Following child's death in Ontario, here's what you need to know about rabies
An Ontario child died last month after coming into contact with a rabid bat in their bedroom, which was the first known human rabies case in Canada since 2019.
NDP house leader laments 'agents of chaos' in precarious Parliament
NDP House leader Peter Julian says there's more his party wants to do in Parliament before the next election, but if the current dysfunction continues it will become a factor in how they vote on a confidence measure.
Former Colorado county clerk Tina Peters sentenced to 9 years for voting data scheme
A judge ripped into a Colorado county clerk for her crimes and lies before sentencing her Thursday to nine years behind bars for a data-breach scheme spawned from the rampant false claims about voting machine fraud in the 2020 presidential race.
Here's what the jury didn't hear in Jacob Hoggard's sexual assault trial
A northeastern Ontario jury has started deliberating in Canadian musician Jacob Hoggard's sexual assault trial, we can now tell you what they weren't allowed to hear.
Youth pleads guilty to manslaughter in death of P.E.I. teen Tyson MacDonald
A teen charged with the murder of another teen on Prince Edward Island last year has pleaded guilty to a lesser charge of manslaughter.
A French judge in a shocking rape case allows the public to see some of the video evidence
A French judge in the trial of dozens of men accused of raping an unconscious woman whose now former husband had repeatedly drugged her so that he and others could assault her decided on Friday to allow the public to see some of the video recordings of the alleged rapes.
2 dead after fire rips through historic building in Old Montreal
At least two people are dead and others are injured after a fire ripped through a century-old building in Old Montreal early Friday morning, sources told Noovo Info.
Scientists looked at images from space to see how fast Antarctica is turning green. Here's what they found
Parts of icy Antarctica are turning green with plant life at an alarming rate as the region is gripped by extreme heat events, according to new research, sparking concerns about the changing landscape on this vast continent.