31 March 2014
According to Benjamin Tal, deputy chief economist of CIBC World Markets, Canadians are so used to extremely low mortgage rates now that recent rate decline doesn’t have that kind of effect that it did earlier.
“Today we can see a generation of Canadian buyers who have never faced high or rising mortgage rates. These low mortgage rates are normal for them,” – he noted. “Of course, the influence is still there, but it’s not as strong as it used to be.”
And though a 2.99% rate may make a house purchase a bit more affordable, this scheme doesn’t work in such markets as Toronto.
“Now there are 10-20 offers on every good Toronto downtown house, and it’s quite problematic for buyers these days,” – said Alice Kent, a real estate agent with Bosley Real Estate in Toronto.
In her opinion, small rate changes are usually not enough to attract new homebuyers into the market. As a rule, rates are watched by those who are already searching for a house to buy or by homeowners who need to refinance.
“It seems the Canadian real estate market has 9 lives: every time it’s expected to show a decline because of rate increase, something happens and rates remain low,” Tal added.