The policy interest rate remains stable at 5%
Montreal, March 6, 2024 – Today, the Bank of Canada announced the maintenance of its policy interest rate at 5%, a long-awaited stability that brings a sense of confidence to the real estate sector.
Impact on the Montreal Real Estate Market
In early 2023, in response to an increase in the key rate reaching between 4.5% to 5%, the real estate market experienced a significant slowdown. This surge represented a considerable leap from the key rate, which varied between 0.25% and 1.75% during the pandemic (2020 to 2022), affecting the mortgage rates offered by major banks. In this economic context, many buyers abandoned their purchase plans in early 2023, hoping for a potential decrease in rates.
Source : Bank of Canada
Following the maintenance of the key rate at 5% in the last five announcements, several buyers have resumed their purchasing projects. Notably, the announcement in January 2024 of the key rate remaining at 5% led to a resurgence in the real estate market, as observed by our real estate brokers in Montreal.
Favorable Financing Conditions for Property Acquisition
With an unchanged key rate, borrowers benefit from favorable financing conditions. Mortgage rates from major banks are expected to remain attractive, encouraging Canadians to invest in real estate. Buyers actively seeking a new home currently enjoy a less competitive market due to the absence of other buyers.
If you are a buyer looking for your next acquisition, we invite you to read the following article: Is it the Right Time to Buy a Property?
Anticipated Key Rate Decrease in 2024
According to many economists, it looks like there might be a decrease in interest rates by the end of 2024, as they foresee the possible conclusion of rate hikes. If this happens, it might motivate a lot of buyers to kick-start their real estate plans, making the competition in the market more intense. We’ll keep a close eye on the Bank of Canada’s next announcement on April 10.
In conclusion, the decision of the Bank of Canada to maintain the key rate at 5% offers a positive outlook for the Montreal real estate market. Economic stability and favorable financing conditions contribute to creating a conducive environment for buyers.
Sources :
Policy interest rate | Bank of Canada
https://www.bankofcanada.ca/core-functions/monetary-policy/key-interest-rate/
Raise in key interest rate: its impact on mortgages and the real estate market | Yanick Sarrazin
https://yanicksarrazin.com/en/immobilier/news/raise-in-key-interest-rate-its-impact-on-mortgages-and-the-real-estate-market/
Mortgages : understanding them better for a real estate purchase | Yanick Sarrazin
https://yanicksarrazin.com/en/immobilier/buyer-information/mortgages-understanding-them-better-for-a-real-estate-purchase-2/
Real estate brokers Montreal | Yanick Sarrazin
https://yanicksarrazin.com/en/montreal-real-estate-broker/
Is it the right time to buy a property | Yanick Sarrazin
https://yanicksarrazin.com/en/immobilier/buyer-information/is-it-the-right-time-to-buy-a-property/
Interest rates may have peaked – is it time to jump into the housing market? | Yanick Sarrazin
https://globalnews.ca/news/10251001/interest-rate-hold-spring-housing-market/
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