Lower interest rates expected to ease mortgage costs and drive home purchases
A new survey reveals that one-third of Canadians are hopeful the Bank of Canada will begin cutting interest rates in June, with many believing this will improve their ability to purchase homes and manage expenses.
According to Dye & Durham, 32% of Canadians expect the Bank of Canada to drop rates on June 5, while 42% believe a rate cut will not be announced this time. The survey, which included over 1,500 Canadians, also found that 65% of respondents feel lower interest rates would positively impact their financial well-being.
"It's clear that higher rates have done their job, cooling consumer spending significantly and helping to bring inflation down to much more manageable levels," Dye & Durham COO Martha Vallance said in the report. "Consumers have said they're ready to start spending again and are just waiting for the Bank of Canada to make its move, though few should expect rates to return to where they were before.”
Nearly two-fifths (38%) of Canadians have postponed major purchases due to high interest rates. Among those expecting to make significant purchases once rates decline, 57% plan to wait for substantial cuts before spending on larger items.
A majority of Canadians (81%) believe that lower interest rates would make it more affordable to manage mortgage costs, purchase new homes or properties (70%), sell owned homes or properties (66%), undertake home renovations (65%), and increase personal or emergency savings (58%) or retirement savings (48%).
For those planning major expenditures once rates drop, the most common planned purchases include new cars (15%), new homes or primary residences (14% overall, 24% for renters), and significant home renovation projects (12%).
High-rate mortgage renewals have stretched many Canadian homeowners, with some seeing monthly payments increase by thousands of dollars. Over two in five (41%) homeowners with mortgages plan to refinance once rates decline, with Albertans (58%) particularly keen on this strategy to reduce monthly expenses.
Renters are also closely monitoring the Bank of Canada's decision, seeing lower interest rates as a potential gateway to homeownership. Nearly 57% of renters believe lower rates will make it easier to buy a home in the future, with 50% saying it will increase the likelihood of homeownership.
For younger Canadians (18-34), 76% believe lower rates will make it easier to afford a new home, and 70% think it will make homeownership more likely.
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The survey also found that 12% of Canadians plan to sell their primary residence and move within the next twelve months, a figure unchanged from previous quarters. However, the percentage of those planning to wait until sale prices increase before selling has slightly decreased to 16%, down from 18% in Q1 2024.
“Industries like real estate, automotive sales, construction and more – along with those industries that play critical roles in supporting them – should take note and prepare for a fast-moving market once meaningful cuts are made," Vallance said.
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