Good News for the Real Estate Market: The Bank of Canada Lowers Its Key Interest Rate to 4.75%

A Turning Point for the Real Estate Market

For the first time since July 12, 2023, the Bank of Canada has lowered its key interest rate, reducing it from 5% to 4.75%. This decision marks a highly anticipated turning point for the real estate market. Although a 4.75% interest rate remains high compared to recent years, this drop sends a clear signal of a directional change.

Optimism for the Canadian Real Estate Market

This signal could well bring a wave of optimism across the real estate market in Canada, particularly in Quebec where a shortage of property inventory favors sellers. Homeowners who were waiting to see the direction interest rates would take before putting their property on the market might be encouraged to start the process, anticipating better fixed and variable rates in the future.

Success of Monetary Policies Against Inflation

The lowering of the key interest rate also indicates that the monetary policy implemented by the Bank of Canada to control inflation has been effective. The Bank of Canada's goal is to reach an inflation rate of 2%. In April 2023, the inflation rate was 4.3%. Last April (2024), the recorded inflation rate was 2.7%. It can be inferred that the economy has contracted sufficiently following the interest rate policies.

Benefits for Consumers and the Real Estate Market

Thus, not only will mortgage rates start to become more affordable, but consumers will also begin to breathe easier with the stabilization of food prices and consumer products. This context is favorable for the real estate market.

Cautiousness and Real Estate Advice Recommended

However, it is important to note that we will not see a significant change in the number of houses for sale overnight. This is a new trend that is emerging on the horizon, and the impact will be felt over the coming months. If you are considering selling or buying a property and are wondering if it is the right time or if you are seeking advice on the best strategy to take, consult your residential real estate agent.

For personalized advice and expertise on the subject discussed in this blog, Martin Buisson, a residential real estate broker, is at your disposal. Do not hesitate to contact him for any questions or if you wish to discuss your options in the real estate market. Here are his contact details for easy communication:

• Martin Buisson
• Real Estate Broker
• Email: mbuisson@royallepage.ca
• Phone: (514) 909-2609

In conclusion, this marked decrease in the key interest rate presents a window of opportunity for both current and prospective homeowners. With benefits including more affordable mortgage rates and a potential increase in inventory, the real estate market is on the cusp of a turning point. Whether you're considering buying a new home or selling your current property, now may be an opportune time to consult with a professional residential real estate agent like Martin Buisson to navigate this changing landscape effectively.