LATEST RATE CUT

by Shawn Lackie

I don’t know about you but I am getting tired of hearing about Donald Trump. We need some kind of news blackout holiday from listening to the antics of their president.

Now that I have that out of the way, this latest stage of the trade war could actually benefit people who want to buy a home. On March 12th, the Bank of Canada (BOC) announced their 7th straight interest rate cut, bringing prime down to 2.75 percent, the lowest the rate it has been since June of 2022. It’s taken almost three years to get here, but there is a good likelihood the rates could drop even further.

The next rate announcement will be in April and could very well be another .25 cut. So what does this mean for buyers? It could bode well for the Real Estate market which has been fairly stagnant for the last 18 months. New listings are few and far between and buyers have been on the sidelines, waiting for the next shoe to drop.

One thing which really DOES need to happen is, for sellers to get with the times. I know this has become a tired rant for me but the frustration level runs high when you have a seller who simply won’t budge. You can’t chase the market, especially in this day and age. If you want to price your home, compared to the price one sold down the street a few years ago, well best wishes with that.

I had a conversation recently, with a potential listing in Whitby. I did my homework and more or less came up with a number I thought would be good, given what had happened in the market in recent months. He obviously had other ideas. We were about 300K apart! Although I could show data to back up my claim, the seller felt he “needed” to get that much, to cover what he had put into it. Some investigating would have proven otherwise, but if someone wants to believe it’s their castle, well, it IS their castle. So that's a fruitless endeavour to say the least and is one area which needs fixing.

Brad Vokins, a local mortgage broker, and a very good one at that, provided another nugget which bears looking at.

From Brad: “The Bond market dropped to 2.515 percent, the lowest since April 10th, 2022. Fixed rates were around 3.14 percent during those times. Also the percentage of BOC decreasing the overnight lending rate, next week, went from 30 percent to 80 percent.” He sent me that a week before the rate cut, so it was very prescient timing. What this means is, the fixed rate mortgages can now drop their rates, to be more competitive with the variable packages. This was another thing buyers have been waiting for. In this day and age, what with job security and aforementioned insanity to the south of us, buyers need to be more assured of their purchases. Especially when it could be a home, the most expensive thing you may buy in your lifetime. Some longer term cost of housing certainty should help the market, and a few more interest rate cuts certainly wouldn’t hurt.