Do lower rates help prebuild condo buyers? Yes. Here’s why.
The Bank of Canada lowered the key interest rate by another 25 basis points this morning. Today’s quarter-point cut is the third in a row, bringing the overnight rate down to 4.25 per cent, and it doesn’t look like it’s going to stop there. Economists are predicting further cuts through the remainder of the year and into 2025.
“Last year, inflation was well above target and the market was overheating. Today, inflation is closer to the target 2%,” BoC Governor Tiff Macklem said this morning in his press briefing.
The consumer price index hit 2.5 per cent in July, its slowest pace in nearly three years. The Bank of Canada has forecast inflation will return to its two per cent target by the end of next year.
How this Helps Lakeside West Buyers
“The story about inflation and why it’s still at two and half per cent, is largely about housing and about rents in particular,” said Jimmy Jean, chief economist at The Desjardins Group.
Jean says no amount of monetary policy tightening can have an impact on housing, given it’s a supply and demand issue.
This means rental prices may or may not rise but are unlikely to fall in the foreseeable future. Combined this with falling interest rates, these factors serve to make the purchase of a condominium, either to live in or to rent out, more desirable.
Looking into the Future
The BoC is also watching the labour market. The Canadian job vacancy rate has shown little sign of revival having declined steadily amid weakening labour demand over the past two years. While good progress has been made on inflation, businesses clearly remain cautious when it comes to growing the payroll.
To support employment and the economy, the BoC is likely to continue lowering the key interest rate. As the bank’s easing cycle continues, forecasters expect the policy rate to fall to between 2.25 per cent and 3.25 per cent by the end of next year.
RBC’s “Dare to Compare” Mortgage Solution
RBC® offers an excellent builder mortgage solutions for Lakeside West with some very important features. First, you can count on a firm approval for the entire construction period. Once approved, you stay approved. No re-qualification or re-appraisal required. The most relevant feature as it pertains to this article’s topic, you can take advantage of a lower interest rate (if available) 120 days prior to closing. That means if the BoC continues to lower key interest rates, you will benefit.
Learn more about RBC’s “Dare to Compare” Mortgage Solution.
More Good News for Lakeside West Buyers
The outlook is good!
If you agree, you can select one of our new condominiums at Lakeside West by contacting Mark Rice PREC and putting down a deposit of 5 per cent.
If you’re looking for a two-bedroom unit, be sure to ask about our current offering of $10,000 price reduction off *list price for the first ten accepted offers.