In its newly released forecast for the year ahead, digital mortgage brokerage nesto noted that each of Canada’s five leading banks anticipate a lower central bank policy rate by the end of the year.
The company highlighted that Bank of Montreal (BMO), Royal Bank of Canada (RBC), and Scotiabank all believe the Bank of Canada’s trendsetting rate will have fallen to 4.0% by the end of the fourth quarter, while Canadian Imperial Bank of Commerce (CIBC) forecasts a 3.50% rate by then and National Bank see it sitting at 3.25%.
What effect would rate cuts have on the housing market?
With scores of would-be Canadian homebuyers reportedly sitting on the sidelines and waiting for rates to drop before they push ahead with their purchasing plans, a Bank of Canada cut would spell welcome news for the mortgage market.
Still, it’s also worth noting that too steep or dramatic a cut could propel a big upsurge in market activity, nesto’s co-founder and principal broker Chase Belair (pictured) told Canadian Mortgage Professional – one that could also herald a spike in home prices.
With no clear timeline for rate cuts, market activity may remain subdued in the first few months of the year, according to Matthew O’Neil, President of Connolly Capital Mortgage Solutions.https://t.co/wsZ3tLbs1f#mortgageindustry #housingmarket #homesales #interestrates
— Canadian Mortgage Professional Magazine (@CMPmagazine) January 16, 2024
“It should bring some fuel to the market, but it’s a double-edged sword at the same time because if you have a lot of borrowers with new access to high mortgage amounts or properties, then it’s going to put upward pressure on home prices again,” he said.