Here we are -- as widely expected by economist, the Bank of Canada CUT is policy rate today to 4.50% (from 4.75%), as Canadians struggle with debt loads and a slowing economy across the country.
This represents the second cut in rates since the announcement one month ago, which BoC Head, Tiff Macklem indicated a gradual pace of rate relief going forward last meeting, basing it's decision on inflation and GDP results. Today's announcement also provided potential FURTHER CUTS, if inflation continues to ease throughout this year (Article).
Based on MNP's Consumer Debt Index, Canadians are not feeling good about their debt loads, with 2/3 of the surveyed said they desperately need interest rates to go down.
For home owners, those who have a variable rate mortgage stand to benefit from a interest rate cut (rate-adjusted or full variable - if you don't know the different just ask me!). However, fixed-rate mortgages are tied to the Canadian bond market, which have already priced in future cuts.
Below is the key metric the Bank of Canada assesses for adjustments in the bank rate:
Here's how Calgary's real estate prices have performed since 2019, with prices of detached homes:
For my clients, we expect likely an uptick in activity in the fall off the back of this announcement. Heading into the winter months, there's typically fewer listings, and with a rate cut (increasing buying power for many), we expect a fairly busy season ahead.
I'd suggest for buyers, to prepare and try to get a sense of what you'd like to get into well ahead of the fall season if you're serious.
Again, feel free to reach out if you have any questions, or want to chat in detail about the possible avenues of how we can help!