How the Bank of Canada’s Rate Cuts Impact Home Affordability in 2024
The recent interest rate cuts by the Bank of Canada in June and July 2024 have sparked significant changes in Home Affordability across the county. This shift has opened up new opportunities for potential homebuyers, particularly in Canada’s more expensive markets. At Client First Mortgage Solutions in Maple Ridge, owners/operators Steve and Nathan, are here guide you through these changes.
Home Affordability and Understanding the Rate Cuts
The Bank of Canada lowered its benchmark interest rates from 5% to 4.5%. This has led to a drop in the average five-year fixed mortgage rate to 5.29% in July, down from 5.47% in June. This decrease has also eased the mortgage stress test rate to 7.29%. For homebuyers, this translates into needing over $5,000 less income to qualify for a mortgage in some of Canada’s priciest markets.
Home Affordability and What’s Happening in Vancouver?
In Vancouver home prices decreased by $9,400, lowering the income needed to qualify by $5,020.
Should You Buy Now Or Wait?
Despite the improved Home Affordability, experts suggest that a buying frenzy isn’t imminent. With home prices flatlining, it might be wise to monitor the market closely. However, with the Bank of Canada expected to further reduce rates by 2025, a more active market could be on the horizon.
Mortgage Tips for Prospective Buyers
- Stay Informed: Keep an eye on the interest rate trends and market conditions.
- Get Pre-Approved: With rates fluctuating, securing a pre-approval can help lock in a favorable rate.
- Consult with Experts: Steve and Nathan at Client First Mortgage Solutions are here to answer your questions and help you navigate these changes.
Original Article – Canadian Mortgage Professional – August 20, 2024
