When the full implications for the Canadian economy of that public health emergency became clear in March 2020, the Bank of Canada slashed its benchmark rate to a rock-bottom 0.25%, heralding an era of access to cheap credit that helped fuel a housing market explosion.
House prices in the country’s hottest markets spiked during that boom, worsening an affordability crisis and presenting further challenges for first-time buyers already struggling to enter the market.
While little has changed on that front for new entrants to the market even as it’s cooled, many of those prospective buyers are also changing their approach in a manner that could prove beneficial to their purchasing aspirations, according to Trafford.
“Affordability is not what it was, but I don’t think it’s outrageous either,” he said. “I just think it has had an effect that people are now looking like, ‘I’ve got to buy something a little more reasonable to start, or I may not be able to be in the GTA [Greater Toronto Area] where three, four years ago everybody could afford to be in the GTA. Well, you can’t – you have to look outside.”
Is there good news for borrowers on the affordability front?
A measure contained in the federal government’s latest budget, meanwhile, could prove a boost to new buyers: the introduction of a tax-free savings account for Canadians hoping to purchase their first home.