---

Bank of Canada expects home sales to pick up with the latest rate cut, and the new mortgage rules
coming December 15

The Bank of Canada expects that there will be more activity in the country’s real estate market,
spurred by the central bank’s latest interest-rate cut and easier mortgage policies set to take
effect December 15.

The bank’s 50-basis-point cut, which reduced interest rates to 3.25% on Wednesday, was its fifth
cut since June. The lower interest rates have reduced the cost of borrowing and have helped
prospective homebuyers qualify for a mortgage. The move is expected to provide significant relief
to the housing market, easing borrowing costs and stimulating demand in a time of slowing GDP
growth and persistent global uncertainties.

As more homebuyers have waded back into the market, sales have been slowly moving up. The most
recent national sales data show transactions in October at their highest level in more than two
years.

In addition to cheaper home loans, the federal government’s looser mortgage policies will take
effect Sunday. The new mortgage rules will lower downpayment requirements for homes valued between $1 million and $1.5 million and expand the availability of 30-year amortizations to reduce monthly mortgage payments for all first-time home buyers and all purchasers of new builds.

Under these rules, buyers will need to put down a minimum of 5% on the first $500,000 and 10% on the portion between $500,000 and $1.5 million.

All other buyers (2ⁿᵈ time buyers and beyond) of new builds only are eligible for a 30-year
amortization on insured mortgages.

A homebuyer must pay for mortgage insurance if their down payment is less than 20 per cent of the
home’s purchase price. The insurance protects the lender if the borrower defaults on their payment.
Because an insured mortgage guarantees that the lender will not lose money, lenders are willing to
offer lower interest rates on insured mortgages. First-time buyers have been waiting for the rule
changes.

The lower interest rates and new mortgage rules will be in place before spring, which historically has been the busiest season for real estate sales.

Currently, the lowest five-year fixed mortgage for an insured borrower with a
nonbank lender is 4.14% and the lowest five-year fixed rate with the big banks is CIBC at 4.59%.
In the coming days and weeks, consumers could potentially see the five-year fixed rate hit 4% and
even 3.99%, as lenders post competitive rates for customers shopping around.

Mortgage wars will heat up as there’s a lot of business up for grabs with renewals and first-time
buyers and move-up buyers entering the market.

At the Wednesday press conference, Ms. Rogers, BoC senior deputy governor said it is possible that
the federal government’s decision to admit fewer newcomers may act as a “counterbalance” on the
easier homebuying conditions.

She also noted that home sales have increased without a corresponding rise in prices. “An increase in activity without an increase in price is a good thing for the Canadian economy right now,” she said.

• Bank Of Canada Pulls Trigger On Second 50 Bps Interest Rate Cut | “On Wednesday morning, the Bank of Canada (BoC) announced an interest rate cut of 50 basis points for their December decision — the eighth and last of the year — that brings the policy rate down to 3.25%. The last time the rate was this low was between September and October of 2022, back in the earlier days of this hike cycle.”
• Why December could be the perfect month to buy or sell | “On Wednesday morning, the Bank of Canada (BoC) announced an interest rate cut of 50 basis points for their December decision — the eighth and last of the year — that brings the policy rate down to 3.25%. The last time the rate was this low was between September and October of 2022, back in the earlier days of this hike cycle.”
• Buying A Tenanted Property In Ontario | “It turns out just a little over three per cent of residential properties sold in B.C. in 2021 were owned for less than a year before being resold. Not only is the prevalence of “flipped” sales low, but the economic profits generated by such transactions were negligible, suggesting that flippers are not walking away with exorbitant ill-gotten wealth.” 
• Buyers are still nabbing homes for way under asking price in most parts of the GTA | “The number of people willing to forfeit decades of their life’s earnings to own a sliver of Toronto area real estate may be starting to creep back up again after a rocky year, but it seems that even with a bit more competition, many buyers are still getting quite the bargain (relatively speaking, of course).”   
• ORECanadian Rents Decline To 15-Month Low In November | “After rents declined for the first time since 2021 in October, prices slipped even further in November, reaching a 15-month low.By the end of the month, average asking rents for all unit types had hit $2,139, down 1.6% from last November and 0.6% from the previous month when rents had dropped 1.9%, according to the latest National Rent Report from Rentals.ca and Urbanation..” 

The Bosley Advantage

Read about the heritage and innovation that form the foundation for Bosley’s industry-leading approach to real estate.

The Bosley Advantage