As expected, the Bank of Canada cut the overnight target rate by .50%. The largest cut we have seen since the pandemic and well deserved for our Variable Rate Mortgage holders (including me) who have continued to ride out the past two years. Inflation and all economic data supported this rate cut.
DLC’s own economist, Dr. Sherry Cooper is anticipating we could see a total of another 1.25% cuts to this rate by Spring of next year. This morning’s .50% rate cut reinforces speculation of another .50% cut in December. However, the Bank will likely need to see continued weak economic data and low inflation to prompt another big move.
Below is more detail that came from Sherry Cooper and her bottom line is that, we will see a more robust market with the recent mortgage rule changes, lower rates and so many people that have been sitting on the sidelines.
“Resales and renovations are anticipated to recover as interest rates decline. Renovations should also be supported by a projected rise in house prices. Recent changes to government mortgage insurance rules are expected to bolster housing demand. Although population growth should ease, the level of demand is expected to remain robust and support new construction. Lower interest rates may also facilitate some increase in housing supply by easing financing costs. However, constraints on the amount of land available for new homes, zoning restrictions and a lack of skilled labour are expected to limit the pace of construction, particularly over the near term. As a result, growth in housing demand is expected to outpace increases in supply. Unlike other sectors of the economy that are experiencing excess supply, the housing market is projected to remain tight. House prices are expected to rise, but the pace of increases will likely be restrained because some home buyers will face affordability challenges”.
Today’s action is great news for the Canadian economy and housing activity. Market participants are now expecting home resales to pick up sharply in the first quarter of next year. The coming spring housing season should be robust, boosting sales and prices. If you would like to read the full article CLICK HERE
Now is also a great time to look at your own mortgage if you have one and see if you have room to improve your rate. Often times it makes sense to pay a penalty and break the term early as you may reduce your monthly payments and save in interest overall. We can help with that, reach out and we will run different scenarios for you to see what makes sense.
Contact us at the office at 604-552-6190 or support@primexmortgages.com