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Home Bank of Canada

The Wait for Cuts Continues: Bank of Canada Holds Interest Rates

Mackenzie Scibetta by Mackenzie Scibetta
April 10, 2024
in Bank of Canada, Canada, Mortgage News
Reading Time: 4 mins read
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Homebuyers will have to wait a little longer for interest rate relief as the Bank of Canada announced today that it was holding the overnight lending rate at 5%. This is the third time this year that the Bank has held interest rates. Many economists predict that rate cuts are coming this summer, yet the exact timing for the first rate cut in four years will depend on the growth of the economy. 

“Prospective buyers eyeing the market this year should keep in mind that a drop in interest rates might spark a surge in market activity,” explains Carrie Lysenko, Zoocasa CEO. This would result in increased bidding wars, driving up property prices. “Ultimately, deciding whether to buy a home now or wait for interest rate relief hinges on a careful evaluation of your financial situation and ability to handle mortgage payment changes.”

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Fixed Rates are Stabilizing

The good news for homebuyers is that fixed rates have been trending downward for the past few months. Since January 2024, some 5-year fixed rates have been hovering around 4.84%, while the most current rates are even lower at 4.79%. In a recent Zoocasa survey of more than 1,500 homeowners, the majority of respondents expressed confidence in their ability to comfortably make their mortgage payments even if interest rates were to rise (35.9%). Only 4.1% of homeowners said they definitely could not manage their payments if rates went up. 

  • Read: North American Homeownership Satisfaction High Across Generations: Survey

“Any indication of rate cuts coming sooner will cause bond yields to drop and fixed rates to follow suit and will put upward pressure on home values,” explains James Laird, Co-CEO of Ratehub.ca and President of CanWise mortgage lender. 

Demand Building as Spring Market Approaches

The overnight lending rate has been above 4% for over a year (since January 2023). This has created an atmosphere of uncertainty and hesitation for buyers and sellers, which in turn resulted in a slowdown in national sales in the second half of 2023. But with the expectation that high borrowing conditions will not last much longer, buyers are regaining confidence in the market. 

  • Read: Here’s How Much Canadian Homebuyers Will Spend on Their Mortgage Each Month

In March, month-over-month home sales were up by 17% in Toronto Region, with Mississauga, Burlington, and Oakville all experiencing a more than 15% month-over-month increase in sales. 

It’s not just the Ontario market that is seeing momentum build; Vancouver home sales were up 16.7% month-over-month and Calgary sales were up 24.8% month-over-month in March. Increased demand is also giving sellers the confidence to list. New listings jumped up by 15% in Toronto Region from February to March, while in Greater Vancouver new listings increased by nearly 10%. 

“This strong start to the housing market will cause the Bank to be cautious in indicating when the first rate cut might occur in order to not add more fuel to the fire,” adds Laird. 

Do you have questions about the recent rate hold or conditions in your local market? Our real estate agents are here to help. Give us a call today to speak to an agent in your area. 

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Mackenzie Scibetta

Mackenzie Scibetta

Mackenzie Scibetta is a seasoned Content Marketing Specialist at Zoocasa, where she brings her expertise to the world of real estate. As a dedicated real estate writer, Mackenzie's primary goal is to equip home buyers and sellers with the most up-to-date market insights, enabling them to navigate their real estate ventures with confidence. Mackenzie's writing is characterized by its depth and breadth, covering a wide range of topics related to the real estate industry. From exploring the intricacies of mortgages to meticulously tracking and analyzing trends in local markets across Canada and the U.S., Mackenzie is known for her comprehensive and data-driven reports. Her commitment to providing valuable information is evident in the consistent quality of her work. Mackenzie's research and insights have earned her recognition from prominent media outlets. Her expertise has been featured in BNN Bloomberg, CTV News, the National Post, The Globe and Mail, and even The New York Times. These accolades underscore her position as a trusted authority in the field of real estate.

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