Bank Of Canada Rate is now 4.25%
The BoC has cut its overnight rate by 25 basis points today, September 4, 2024 in another effort to boost a sluggish economy.
This decision is influenced by factors such as inflation dropping to a 40-month low of 2.5% in July, signs of persistent weakness in the labor market, and the BoC's expected shift in focus from taming inflation to boosting the economy.
Read the Bank of Canada News Release here
This marks a change from previous expectations of rates remaining at 4.00% or higher by year-end. The Canadian economy is perceived to be in a more challenging position than the U.S., with greater sensitivity to interest rates.
The BoC is projected to implement rate cuts before the U.S. Federal Reserve, which is expected to begin reducing rates next month. Despite expectations of more rate cuts, the Canadian dollar strengthened against the U.S. dollar in August.
This is a positive move for both homebuyers and home sellers. Lower interest rates give buyers more buying power at the negotiation table, and while sales may pick up, we are not expecting to see the rush with escalating prices as we did a few years ago. Many homebuyers are still sensitive to competing, and lending institutions even more so.
Examining the sales statistics over the past five years reveals a distinct period when banks and mortgage companies allowed all sales to proceed, despite inflated purchase prices. This era may now be over. All institutions have tightened their reins. Not only have inflated prices ceased, but buyers have also become much savvier about competing offer scenarios and are no longer falling into the trap of dramatically underpricing properties and artificial results.
Why it’s important than ever to include a financing condition when purchasing a home.
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