CREA housing statistics and the Bank of Canada interest rate decrease

CREA housing statistics and the Bank of Canada interest rate decrease
Last Wednesday, shortly after CREA published its monthly housing statistics, the Bank of Canada made its latest interest rate announcement, stating it was lowering the overnight rate 0.25% (or 25 basis points) to 0.50%.

Media were quick to contact us and ask out thoughts on what the Bank of Canada’s announcement would mean for the housing market moving forward.

Gregory Klump, CREA’s Chief Economist, did an interview with CTV News Channel on this very issue, and you can watch it here.

Below are the media lines we’ve been using:
• Low interest rates don’t by themselves drive house prices – we’ve had low rates for the past 5 years;
• What’s driving house prices in certain areas, specifically Vancouver & Toronto, is a lack of inventory in the face of strong demand for single family homes;
• It is possible for prices to decline even with low interest rates: for example, the MLS® HPI benchmark price is showing a 3.42% decline in Regina and a 2.11% decline in Moncton when compared to last June;
• We don’t believe the latest BoC rate cut will translate to much for consumers – shortly after the announcement (BoC cut its overnight lending rate 0.25% or 25 basis points), TD was first out of the gate announcing it would be dropping its prime rate by 10 basis points, or 0.1%, while other big banks have since announced decreases in the order of 15 basis points, or 0.15%;
• Our experience is that most homebuyers shop and negotiate for mortgages aggressively, and lock in their best rate, most often for 5 years, which helps insulate them for any ups or downs in the mortgage rates;
• Part of REALTORS®’ jobs is to counsel and advise clients and help them get into a house they can afford for the long term.

Should you have any questions, please contact
crea-comms@crea.ca

Author: bramptonrealestateboard

At the Brampton Real Estate Board (BREB) we believe in the ownership of Real Estate. Our objective is to contribute to the capability and growth of our members in their endeavors by marketing all forms of real property throughout the greater Brampton, Halton Hills and Caledon marketplaces and beyond. The Brampton Real Estate Board is dedicated to providing an environment in which it’s Member REALTORS®, employees, Board of Directors, and Committee volunteers are encouraged to grow, succeed and develop in order to provide the highest level of professional conduct and service.

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