BC Housing and Mortgage Insights Newsletter July 23, 2024

This week ~ From interest rate cuts and housing market trends to inflation reports, our expert analysis covers it all. Dive into insights on the Bank of Canada's strategies, regional housing dynamics, and what these changes mean for buyers, sellers, and investors across the country.
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Markets bet on second Bank of Canada interest rate cut coming this week

Economists and market analysts predict the Bank of Canada will announce another interest rate cut this week. The recent Statistics Canada inflation report showed annual inflation dropped to 2.7% in June, fueling expectations of a second consecutive rate cut. The Bank of Canada aims to ease economic pressure without tipping the economy into recession, balancing growth and inflation.

New 30-year amortization mortgages expected to have little positive impact in Kelowna

The new 30-year amortization mortgage rule, starting August 1, is expected to have little impact in Kelowna. Aaron Marsh, a mortgage broker with Rampone Marsh Mortgages, believes it won't significantly help first-time homebuyers. High prices and interest rates make it tough for buyers to qualify, even with extended terms. The rule mainly aims to boost Toronto's new condo market, leaving limited affordable options in Kelowna. The extended mortgage period offers minimal savings and increased long-term interest, making homeownership still challenging for many.

Big central banks are starting to cut rates, slowly

Major central banks are easing monetary policy at a slower pace compared to the rapid rate hikes that started in late 2021. The European Central Bank, Swiss National Bank, and Sweden's Riksbank have begun cutting rates, while the U.S. Federal Reserve might follow in September. The Bank of Canada is expected to cut rates again soon, while the ECB and Bank of England remain cautious. Central banks in New Zealand and Norway show potential for future cuts, whereas Australia's and Japan's central banks maintain a more conservative stance.

Canadian housing market shows signs of revival in June following interest rate cut

In June, Canada’s housing market showed signs of recovery following a Bank of Canada interest rate cut, leading to a 3.7% rise in home sales compared to May. Despite this uptick, challenges persist for buyers and sellers. The market saw a 26% increase in listings from last year, though still below historical averages. Projections suggest continued growth in 2025, with home prices expected to rise. Regional price fluctuations and cautious optimism characterize the current landscape, with further rate cuts anticipated to bolster market activity.

Inflation report “all but guarantees” a Bank of Canada rate cut next week: economists

Canada's headline inflation rate dropped more than expected in June, increasing the likelihood of a Bank of Canada rate cut next week. The Consumer Price Index (CPI) fell to 2.7%, down from 2.9% in May. Economists had anticipated no change. Core inflation measures remained stable, with the CPI-median at 2.6% and CPI-trim at 2.9%. This decline, along with rising joblessness and cautious consumer spending, supports predictions of a quarter-point rate cut on July 24. While some experts remain cautious, bond markets show strong confidence in an imminent rate reduction.