Canadians holding off on home purchases until Bank of Canada cuts rates

Many aspiring homeowners in Canada are holding off on purchasing a home until the Bank of Canada cuts interest rates, according to a recent survey by the Bank of Montreal. The survey found that 72 percent of respondents are waiting for a rate cut before buying, up 4 percent from the previous year.

The survey also revealed that among those planning to buy a home in the near future, only 13 percent plan to buy in 2024, while 26 percent plan to buy in 2025 or later. This hesitation is driven by concerns about the cost of living, inflation, and overall financial situation.

While Canadians are expecting a rate cut in the second half of the year, the Bank of Canada has held its benchmark interest rate at five percent. However, the central bank has signaled that a rate cut in June or July is possible, depending on economic conditions.

Despite the potential rate cut, policy makers have stressed that any moves downward will be gradual. In the meantime, home sales in Canada have been flat, with the MLS Home Price Index falling slightly. This standoff between sellers and buyers has led to a slowdown in the housing market.

Overall, the majority of Canadians surveyed believe they are making financial progress, but concerns about unknown expenses, overall financial situation, and housing costs are causing financial anxiety. As the housing market waits for a potential rate cut, the future of homebuying in Canada remains uncertain.