The association representing mortgage brokers in B.C. said British Columbians will see lower mortgage payments after the Bank of Canada lowered a key interest rate, but is urging additional steps to improve affordability against the backdrop of economic uncertainty caused by Americans.
Rebecca Casey, president of Canadian Mortgage Brokers Association, said the Bank of Canada's decision to drop its overnight rate to 2.75 per cent from three per cent means that borrowers will experience some relief.
鈥淲hile this rate cut is a positive step, we urge policymakers to consider further action to stabilize the housing market and provide financial security for homeowners," Casey said.
Bank of Canada Governor Tiff Macklem announced the drop Wednesday morning. He said the Bank of Canada is dropping rates to counter "the pervasive uncertainty" created by continuously changing US tariff threats, which has shaken business and consumer confidence.
"This is restraining household spending intentions and businesses鈥� plans to hire and invest," he said.
Macklem, however, also warned against high expectations.
"We ended 2024 on a solid economic footing," he said. "But we鈥檙e now facing a new crisis. Depending on the extent and duration of new U.S. tariffs, the economic impact could be severe. The uncertainty alone is already causing harm."
Macklem added that changes in the interest rate cannot offset the impacts of a trade war.
"What it can and must do is ensure that higher prices do not lead to ongoing inflation," he said.
Victor Tran, a mortgage and real estate expert with rates.ca, pointed to this changed environment in his analysis.
鈥淲hile more affordable mortgage rates are a good thing, the current economic climate is not stable and is not an encouraging environment for home purchases,鈥� Tran said. 鈥淎n ongoing trade war and fear of a potential recession later in the year are weighing on people鈥檚 minds and they may be thinking twice about taking on a large amount of debt such as a mortgage. They will likely want to wait and see what happens in the coming months before choosing to enter the market.鈥�
Brendon Ogmundson, chief economist with the British Columbia Real Estate Association, said today's rate cut will have some impact on affordability both because fixed rates are pricing in additional rate cuts and because variable rates will fall alongside the prime rate.
"However, the (bank) was quite emphatic that monetary policy cannot offset the impacts of a trade war and that policymakers must ensure that higher prices do not lead to ongoing inflation, Ogmundson said. "Given that caution, future cuts to the bank's policy rate will be highly dependent on the evolution of inflation and inflation expectations."
More to come...
