{"id":178003,"date":"2025-12-10T23:09:08","date_gmt":"2025-12-10T23:09:08","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/178003\/"},"modified":"2025-12-10T23:09:08","modified_gmt":"2025-12-10T23:09:08","slug":"boc-interest-rate-impact-on-housing-market","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/178003\/","title":{"rendered":"BoC interest rate impact on housing market"},"content":{"rendered":"

Stability in interest rates reduces uncertainty when Canada and the United States are locked in a trade war, real estate professionals say. <\/p>\n

The Bank of Canada decided to hold its latest interest rate decision Wednesday<\/a> at 2.25 per cent, which mortgage specialists say benefits home buyers and sellers in several ways. <\/p>\n

\u201cThe economy is not booming, but it\u2019s not in crisis mode,\u201d Shawn Zigelstein, broker for Royal LePage told BNN Bloomberg in an interview. \u201cPrices have come down in the major centres, but by the Bank of Canada holding this rate, what they\u2019re trying to do is create economic stability.\u201d<\/p>\n

Homebuyers face a predictable environment without fear of sudden price hikes while home sellers, he said, may be willing to negotiate and close deals.<\/p>\n

\u201cI think this is a great time for first time homebuyers,\u201d said Zigelstein. \u201cYou\u2019ve got the ability to get into product that has come down in price significantly within the GTA, you\u2019ve got lower borrowing costs, and you\u2019ve got some sellers out there that are looking to unload some properties. It\u2019s not to say it\u2019s a fire sale by any means, but what it does tell people is we\u2019re willing to negotiate.\u201d <\/p>\n

Bank of Canada Governor Tiff Macklem said the rate hold is in line with inflation close to two per cent.<\/p>\n

The economy added 54,000 jobs in November<\/a> with the unemployment rate falling to 6.5 per cent. However the central bank said the unpredictability of U.S. trade policy and the renegotiations of the Canada-United States-Mexico Agreement (CUSMA) is creating uncertainty about how the economy will adjust to higher tariffs and the underlying momentum of the economy.<\/p>\n

While the hold in interest rates provides reassurance, Keith Reading, senior director of research at Morguard said people are more concerned about jobs and the economy when they look at the housing market.<\/p>\n

\u201cThis uncertainty is keeping a lot of people out of the market,\u201d Reading said in an interview with BNN Bloomberg. <\/p>\n

Hold on interest rates to provide predictable mortgage rates<\/p>\n

Penelope Graham, mortgage expert at Ratehub.ca said home prices have yet to re-heat and plenty of available inventory has made for buyer-friendly conditions in most Canadian markets. <\/p>\n

She said affordable conditions continue to support slow market recovery despite economic uncertainty.<\/p>\n

\u201cGiven the Bank\u2019s stance and economic landscape, it\u2019s unlikely variable mortgage rates will decrease in the near future,\u201d said Graham. \u201cFixed mortgage rates are also still very competitively priced, though are now facing upward pressure as bond yields climb.\u201d<\/p>\n

Homeowners renewing their mortgage next year won\u2019t face sudden or extreme increases in rates which could hurt less, Zigelstein said.<\/p>\n

\u201cThe advantage is renewals are still going to sting for some of those people who were in the market five years ago for a mortgage and locked in at that point,\u201d said Zigelstein. \u201cHowever, the sting is going to be considerably less than it would have been if rates had stayed much higher, which is what they were.\u201d<\/p>\n

Reading said homeowners may benefit with a variable rate mortgage rather than a fixed rate but only in the short term.<\/p>\n

\u201cI think that they\u2019re thinking that at least in the short term, things have settled down a little bit,\u201d Reading said. \u201cIf things do continue to stabilize maybe they look at locking in at some point down the road, but they may not want to make a longer-term mortgage decision.\u201d<\/p>\n

Real Estate Investment Trust continue to struggle despite low interest rates<\/p>\n

Low interest rates make it cheaper to purchase Canadian Real Estate Investment Trust (REITs) which finance property purchases and real estate development. But the types of REITS that have a portfolio of condominiums, detached homes and semi-detached houses continue to struggle due to economic uncertainty. <\/p>\n

\u201cThere\u2019s quite a bit of availability of condos in existing buildings, and they\u2019re generally priced a bit better but generally, I think the condo market is going to be pretty soft I would say into 2026,\u201d said Reading. \u201cIn terms of single-family homes, it\u2019s the same thing. There\u2019s just so much uncertainty that.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Stability in interest rates reduces uncertainty when Canada and the United States are locked in a trade war,…\n","protected":false},"author":2,"featured_media":178004,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[138,219,111,139,69],"class_list":["post-178003","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-new-zealand","tag-newzealand","tag-nz"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/178003","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=178003"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/178003\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/178004"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=178003"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=178003"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=178003"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}