RSS

Bank of Canada’s Rate Announcement and the Toronto Housing Market

The Bank of Canada (BoC) has lowered its overnight rate by 25 basis points, marking the sixth consecutive rate cut. This brings the rate down to 3%, as the central bank moves to support economic growth. Along with this decision, the BoC has announced an end to quantitative tightening and plans to moderately increase asset purchases in line with economic expansion.

Key Takeaways From the Announcement:

  • Inflation has remained steady at 2% since the summer.

  • Lower interest rates are stimulating big-ticket purchases, such as homes and vehicles.

  • Canada’s GDP grew 1.3% in 2024 and is forecast to grow1.8% in 2025-2026, slower than previously expected due to reduced immigration.

  • GDP per capita is improving due to rising incomes and lower interest rates, but overall GDP growth is sluggish partially due to decreased immigration.

  • Uncertainty looms over a potential U.S. trade war, with tariffs from a Donald Trump-led administration threatening to push up prices on imported goods, which could fuel inflation.

  • The BoC acknowledges that monetary policy cannot counteract the effects of tariffs, making the trade situation a significant wildcard for Canada’s economy.

How This Affects the Toronto Housing Market

Lower interest rates make borrowing cheaper, which directly benefits homebuyers in Toronto. Mortgage rates have already been declining, making homeownership more accessible and increasing buyer demand.

1. More Buyers Entering the Market

With rates falling, more first-time buyers and investors are jumping in…. but slowly. Toronto real estate has been sluggish in recent months, but we’re seeing some signs of renewed activity.  Listings are up considerably.  Expect high quality houses in good neighbourhoods like the Annex, Seaton Village, and midtown Toronto to get solid sales prices, while many condos and lesser quality places may stagnate on the market.

2. Home Prices Could See Moderate Growth

While Toronto home prices have been relatively flat, this reduction in rates along with the changes in lending rules should draw more people into the market which theoretically should increase demand which could push prices up modestly. That said the supply side remains relatively high which could help to stifle prices in the market. All of this would make sense in a normal economy, but there is uncertainty in the market at the moment.  With the looming threat of massive tariffs from Trump, people are truly unsure about how the economy will be over the next number of months.  

3. Real Estate Window of Opportunity

Lower borrowing costs make properties more attractive. If you’ve been considering buying a house or even an investment property, this may be a prime opportunity before rates potentially level out later this year and while prices are still relatively low. It is also potentially a good time as many wait to see what will happen with the Trump tariff situation. Many people will likely hold back on making any big decisions while the threat of large changes to the economy hangs overhead, which is completely reasonable.  The coming months will of course tell the tale. Like with any big purchase, there is always a risk, but housing is, and always has been, about far more than the economic investment.  It is primarily a place to hang your hat, to be part of a community, to raise your kids and to simply enjoy your house and turn it into a home where you invite friends and family to enjoy shared time together.. 

Final Thoughts

Overall, for Toronto buyers, sellers, and investors, this rate cut is a positive development, making real estate transactions more affordable and attractive. However, with external uncertainties like trade policy and inflation risks, it’s important to stay informed and make strategic decisions and also to consider the real purpose of a home and whether or not your current situation meets your needs.  Please be in touch with me if you have any questions.


Wayne Bibby is a Seaton Village Resident and Realtor.

wayne@waynebibby.com

waynebibby.com

416 997 4285


Read

Changes to Mortgage Rules Come into Effect Today: What This Means for Toronto Buyers and Sellers

The Canadian government has made significant updates to mortgage lending rules, marking the first change to the price cap for insured mortgages since 2021. These changes have the potential to make homeownership more accessible for many buyers, particularly in Toronto. Let’s break it down.

Key Changes at a Glance

  1. Mortgage Insurance on Properties up to $1.5M

    • For the first time, homes priced between $1 million and $1.5 million are now eligible for mortgage insurance.

    • This means buyers can secure these homes with as little as a 5% down payment, compared to the previous requirement of 20% in this price range.

  2. 30-Year Amortizations for First-Time Buyers of New Builds

    • First-time buyers can now opt for a 30-year amortization when purchasing newly built homes.

    • This will allow buyers who take advantage of this the option to lower their monthly payment by choosing a 30 year amortization.  This of course will lead to more interest paid over the course of the mortgage, but the reduction in monthly payment just may be enough to allow you to afford a house.

What This Means for Toronto’s Real Estate Market

Toronto’s real estate market is already competitive, and these changes are likely to have a noticeable impact, especially since the 1million dollar cap came into effect in 2012 at a time when the average price of a house in Toronto was just under $500K. Today the average price of a property in Toronto is well over a million dollars, so the change is welcomed by many.

  • Increased Buyer Activity: With lower down payment requirements and extended amortization periods, more buyers can enter the market.

  • Potential Price Pressure: More buyers will lead to greater demand could put upward pressure on home prices, especially for properties between $1 million and $1.5 million.

  • Opportunities for First-Time Buyers: These updates make it easier for first-time buyers to secure homes that were previously out of reach.

How I Can Help You

As a dedicated real estate agent in Toronto, I’m here to guide you through these changes and help you navigate your next move. I have mortgage brokers that I work with regularly to get you the best mortgage out there and help you through the process of qualifying for a mortgage. Whether you’re a first-time buyer exploring your options or a seller looking to maximize your home’s value, I’ll provide the insights and strategies you need.

Ready to Take the Next Step?

Contact me today to discuss how these new mortgage rules impact your buying or selling journey. Let’s work together to make the most of this evolving market.

Wayne Bibby is a resident of Seaton Village and trusted real estate agent in Seaton Village, the Annex and beyond.

You can contact me at wayne@waynebibby.com.

Or you can call me at 416.997.4285.

Visit my website at waynebibby.com.

View First time home buyers section of my website right here.

Read
This website may only be used by consumers that have a bona fide interest in the purchase, sale, or lease of real estate of the type being offered via the website. The data relating to real estate on this website comes in part from the MLS® Reciprocity program of the Toronto Regional Real Estate Board. The data is deemed reliable but is not guaranteed to be accurate.