If Bank of Canada interest rates are cut, it may shake up BC's housing scene
The anticipation is building ahead of next week’s Bank of Canada (BoC) rate announcement, and real estate experts speculate it could mean a major shakeup for Metro Vancouver’s housing market.
After Canada’s central bank kept the key interest rate at 5% in January, March, and April, Adil Dinani, a sales representative at Royal LePage West Real Estate Services, emphasized that Canada needs a rate cut.
However, even if they do, “we’re gonna need more than one rate cut to send a clear signal that rates are on a downward trend.”
We’re probably gonna need a series of rate cuts,” he said.
How will buyers and sellers respond?
Jonathan Cooper, president of Macdonald Realty, suggested that next week, “a quarter point reduction in rates won’t have a dramatic impact on mortgage rates overnight… it’s not going to drastically decrease the purchasing power of buyers.”
“I think you’ll get some buyers to stimulate their search… and so I think you may see some uptick in activity,” he said, but added that overall impact of a small interest rate cut will be muted.
So, if there is a small interest rate cut, “you’re not going to see a huge escalation in prices” because there’s a lot of supply in the market,” Cooper said.
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Meanwhile, Cooper suggested that British Colombians who have just been browsing for a new or first home might soon get serious amid a possible rate cut.
He added that homeowners who are unsure whether or not to list their property might soon “jump off.” This way, they would be the first in line for interested home buyers.
“It will provide some psychological support for buyers,” Cooper said.
The expert also advises renters that if they have enough saved for a down deposit, now is the time to buy. However, that is best for people looking to make money in the long term. For those just looking to buy and flip a home, “there is no guarantee that that’s going to work out,” he advised.
“[But] if you know where you want to live, then you have a medium to longer-term time horizon, then it’s a great time to buy,” Cooper said.
BoC members have been split on when to begin dropping interest rates.
However, if the BoC does drop rates, “It’ll be an overall positive thing, a positive move,” Dinani added.
The next rate announcement will come on June 5.