Less than two weeks after buying a new home with a variable mortgage, Madison and Graham Fisk are feeling more confident thanks to another Bank of Canada interest rate cut.
The Keswick, Ont., couple said falling interest rates mean their dream of building a bigger house for their daughter and dog is financially possible.
“We were able to take on that mortgage a lot better than we have in the past few years,” Graham Fisk said.
After the Bank of Canada announced its fifth consecutive interest rate cut since June, homebuyers and industry experts say lower rates are likely to encourage more buyers to enter the market.
While they prefer a fixed-rate mortgage, Fisk said they are considering signing up for a variable mortgage for their home because the Bank of Canada has indicated further cuts are on the horizon.
This latest cut brings the interest rate to 3.25 percent. Last year this rate was five percent. And while further cuts are expected, the Bank of Canada They indicated they might be late throughout the next year.
“The more they come down, the better it will be for us,” Madison said.
Meanwhile, Hazem Madarati, who lives in Milton, Ont. Ma bought a house with his wife on a variable mortgage, wondering what to do with the extra money they would save.
After a few years in the Canadian economy, they say it gives them a chance to catch up with their finances.
“It's giving us an opportunity to finally be able to save, whether it's for a future vacation or other family plans we have in the works,” he said.
2025 brings optimism, uncertainty
Although housing inventory is still low in the Greater Toronto Area, RE/MAX Canada's regional vice-president, Samantha Villiard, says she has seen an increase in sales. October rate cut.
Last month, the Toronto Regional Real Estate Board said home sales in the Greater Toronto Area were up. 40 percent compared to November 2023. The board said that new listings have increased but not enough to meet market demand.
Villiard says the latest cuts are not a panacea for those struggling to get into the GTA housing market.
“I hesitate to call it a game changer. I think it adds a realistic opportunity,” she told CBC Toronto.
Jeremy Kronick of the CD Howe Institute, a nonpartisan think-tank, said he didn't see a big boost in housing demand from previous rate cuts.
But since this is the second big, 50-basis-point cut in a row, Cronic says things could change.
“It's a very big movement, and it can certainly ignite some of those who have been waiting for it to happen,” he said.
The Bank of Canada cut its interest rate by 50 basis points to 3.25 percent, but signaled it may pump the brakes on deeper cuts on inflation concerns.
Many economists hope so The central bank will move closer to 'neutral' rates next year, somewhere around 2.5 to 3 percentage points.
But Cronic and Villard say that if U.S. President-elect Donald Trump follows through on his threat to impose 25 percent tariffs, Canada's economy, as well as the housing market, could be hit.
“The big elephant in the room is what's happening south of the border,” Kronick said.
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