In its recent rate cut, the Bank of Canada dropped its benchmark interest rate by 25 basis points for the second time this year, lowering it to 4.5 percent. This is the lowest rate ever since April 2023. If you are planning to apply a mortgage, may be now is the best time to apply it. To find out what experts think about this rate cut, we have framed the comments of leading mortgage experts.
Here’s what experts think about how the changes would affect Canada’s real estate markets:
- Could offer new optimism: Ratehub.ca
According to Penelope Graham, a mortgage specialist at Ratehub.ca, mortgage holders having variable rates are sure to get rewarded with this rate cut, as their monthly payments will be decreased further.
However, it remains to be seen whether this second cut would provide the motivation purchasers require to re-enter the housing market, given borrowing costs remain too high. However, after a minor increase in sales as a result of the June rate cut, today’s decrease could provide new hope and boost real estate demand.
- Expect smaller monthly payments: CPA Canada
Canadians with variable-rate mortgages can breathe a sigh of relief, as they expect lower monthly payments, while those with fixed-rate mortgages can profit as well if the decreasing trend continues at renewal time, according to the Chartered Professional Accountants of Canada. With the new rate cut, borrowers will witness reduced borrowing costs to buy a home.
- ‘A small boost’: Royal Lepage
According to Karen Yolevski, chief operating officer at Royal LePage, the second rate drop in the overnight lending rate by the BOC is a clear cut sign that the inflation is going down and the Canadian economy is proceeding in the right way. With this rate cut, more prospective buyers can look into the opportunities to buy a new home.
As mortgage qualification requirements continue to fall, potential buyers may gain the confidence they need to return to the house market, she added. Meanwhile, she stated that much-needed inventory has been developing in major markets in recent months, providing customers with more options.
- ‘A little more breathing room’: Rates.ca.
According to Rates.ca, an insurance comparison website, this rate decline of 25-basis point decline will allow a homeowner with a variable-rate mortgage to pay about $15 less per $100,000 in monthly mortgage payments.
It stated that the rate cut comes as numerous housing markets across the country are suffering slow sales and falling house prices, with home sales activity decreasing more than 9% year on year in June.
According to Victor Tran, Rates.ca’s mortgage and real estate specialist, this decrease, paired with the rate cut last month, will give homeowners with floating variable-rate mortgages some breathing room.
So, this rate cut is a boon for prospective homebuyers and variable mortgage holders. If you are wondering how this rate cut will help you save dollars, feel free to talk to our Abbotsford mortgage brokers.