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Bank of Canada Holds Interest Rates

Bank of Canada Holds Interest Rates

Yesterday, the Bank of Canada announced they will hold the benchmark interest rate steady at 5.0 percent. This was the fourth back-to-back hold from the BOC. This decision has sparked discussions within financial circles as experts talk about the reasons for this decision and what is to come.

While this fourth rate hold suggests the hikes may have peaked, there is no date set in stone for rate cuts to begin. Buyers and sellers (and their real estate agents) patiently wait for the next announcement, which is scheduled for March 6, 2024. According to the Bank of Canada’s governor, discussions have re-routed from are rates high enough, to how long should they be maintained. Rate hikes started in March 2022 to stabilize inflation which has decreased from 8.1% to 3.4% as of December. According to economists, rate drops could happen as early as April. Revised reports claim inflation will hit the 2% target by 2025 at this pace.

While the Bank of Canada does highlight that shelter price inflation is a concern, it’s not the only concern. Shelter price inflation refers to the cost of rent, mortgage and utilities to run your home. When Governor Macklem of the Bank of Canada was questioned, he emphasized that it’s not the only inflation contributor and factors like food cost also play a role.

In a nutshell, things are going in the direction the Bank of Canada wanted them to go. In the near future, experts anticipate that inflation rates will be where they want them. This will in turn serve as a catalyst to lower rates. What we do know is lower interest rates encourage buyers, more buyers, more competition.

The mumblings in the real estate world…buy sooner rather than later. To all of our buyer clients, if you are planning to make a move this spring, it may be in your best interest to get moving sooner rather than later. The second buyers catch wind of an interest rate dip, the market is going to go wild. More buyers, less inventory, higher prices. It’s a vicious cycle!

If you would like to schedule a consultation with one of our Toronto real estate agents, please feel free to reach out. We offer a no-obligation complimentary consultation that has huge benefits to buyers and sellers looking to navigate the market.

Click here to book yours today!

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