Some relief for borrowers Wednesday as the Bank of Canada announced its latest interest rate cut.
As anticipated, rates are being slashed by half of a percentage from 4.25 per cent to 3.75 per cent.
The cut is the fourth consecutive one since June and the largest since the start of the COVID-19 pandemic.
“High inflation and interest rates have been a heavy burden for Canadians,” said Bank of Canada Governor Tiff Macklem.
“With inflation back to two per cent, we want to see growth strengthen. Today’s interest rate decision should contribute to a pick-up in demand.”
Michelle Scheibel, with Rampone-Marsh Mortgages, said the cut will translate into significant savings for some.
“CMHC put out a report in B.C., quarter two of 2024, the average mortgage size was $456,000, so that’s almost $200 in interest savings a month,” Scheibel said.
Scheibel added that the high interest rates have kept many would-be buyers on the sidelines for some time.
“For people just wanting to purchase, you know, lots of clients were pre-approving. They’re just waiting,” said Scheibel. “You tell them how much their mortgage payment is, but they’re just not sure they want to pull the trigger.”
Engel and Volkers realtor Richard Deacon said the latest cut may help what’s been a sluggish real estate market in the Okanagan.
Get breaking National news
For news impacting Canada and around the world, sign up for breaking news alerts delivered directly to you when they happen.
“I think this is that extra shot in the arm during uncertain times that’s really, really going to help the market,” Deacon said.
But he added that impact won’t be instant.
“I think a lot of people probably think that this is instantly going to change the world. You know whether…it’s your mortgage rates or all of a sudden properties are going to start selling. No, these things take time,” Deacon said.
“This will take time to wind its way through the financial system and adjust interest rates and mortgages, and then it’ll take some time for buyers and sellers to, you know, to see those results.”
It means what’s been a buyer’s market is expected to remain just that — a buyer’s market for some time to come, especially given the fact that there is a lot of real estate for sale.
“There is, right now, about 10 months of inventory on the market across the Central Okanagan,” Deacon said. “That’s a lot of inventory and so we have to clean up or clear out or sell a lot of that product in order for this to become a more balanced market.”
The Bank of Canada hints at more cuts to come that could further lower the cost of borrowing and give the real estate market an even bigger boost.
“If the economy evolves broadly in line with this forecast, we anticipate cutting our policy rate further,” Macklem said.
The next decision will cone on Dec. 11.
© 2024 Global News, a division of Corus Entertainment Inc.
