Measures taken Bank of Canada to cut interest rates The first “green housing” initiative in more than four years is getting a welcome boost in Calgary, but experts don’t expect it will have much of an impact on the city’s already hot real estate market.
The Bank of Canada cut its overnight lending rate by 25 basis points to 4.75% on Wednesday, down from 5% where it has been since July 2023.
Curtis Prokopchuk of eXp Realty in Calgary He said that while any relief would be welcome, it could actually make the market even hotter than it already is.
“Prices will probably go up as interest rates go down,” he told Global News.
Prokopchuk noted that home prices have been high over the past few years, and waiting for interest rates to drop isn't always in the best interest of potential homebuyers.
He added that he's had several buyers wait, only to see the price go up by $20,000 to $30,000.
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“Lower interest rates may help alleviate that a little bit,” Prokopchuk said. “But it won't be enough to offset the higher prices.”
Sheldon Phillips, mortgage broker at Enrich Mortgage Group Agree with Prokopchuk.
He said while the recent fall in interest rates would benefit existing variable rate homeowners, the same would not be true for those looking to enter the market.
“As far as a buyer’s market goes — it doesn’t help much,” he said.
Mr Phillips said lower interest rates would only give people more purchasing power, and greater purchasing power would put further pressure on sales and prices.
“When everyone’s affordability changes, everyone can afford more stuff,” he noted.
“There's a one-month supply of housing right now. Then supply and demand kicks in and everyone will pay more for the same thing. If they can afford to buy a home now, they should buy it now. Waiting does them no good because as interest rates go down and prices go up, they end up paying the same price.”
Phillips added that lower rates might actually help renters because most landlords he knows have variable-rate mortgages.
“With the large number of mortgages being reduced, there will be less upward pressure on rents.”
The Bank of Canada will announce its next interest rate decision on July 24.
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