'Many are playing it safe'
The recent 0.25% interest rate cut by the Bank of Canada has done little to boost Canadians' confidence in the housing market, according to a new survey by Abacus Data.
The survey, conducted among 1,550 Canadian adults in June 2024 following the rate reduction, found that a large majority (73%) don't anticipate the cut to make buying a home more accessible. Similarly, 72% believe the impact on the overall housing market will be minimal.
This cautious outlook is particularly strong among older Canadians. For instance, 88% of those aged 60 and above believe the rate cut will have little to no effect on affordability, and a similar proportion (88%) expect minimal impact on the housing market as a whole.
“When Canadians look at the recent rate cut by the Bank of Canada, many are playing it safe,” Abacus said in the report. “They’re not convinced it’ll make buying a home cheaper or shake things up much in the housing market. About half think it won’t really change how homes are sold either.
“Our research confirms Canadians are cautious about diving into the housing market right now. They’re holding off on buying homes sooner and not rushing to sell either, even with the rate cut.”
Younger Canadians, however, showed a glimmer of optimism. Nearly half (44%) of those aged 18-29 anticipate the rate cut to lead to increased market activity, compared to only 26% of seniors who share that sentiment.
The survey also explored the impact on current mortgage holders, many of whom face upcoming renewals at potentially higher rates.
About 49% of Canadians expressed some optimism or relief about their mortgage renewals due to the recent cut. This sentiment was most pronounced among those who believe further rate cuts are likely in 2024 (66% optimistic).
“Mortgage holders are split—some see potential savings on renewals, while others are unsure how future rate changes might play out,” the report read. “This cautious approach shows how Canadians are taking their time to see how things unfold in the housing market.”
However, 39% of Canadians indicated the current cut did little to ease their concerns, suggesting a single reduction might not be enough to sway their outlook without the prospect of future decreases.
Read more: National home sales pick up in June
“With doubts about improvements in affordability and market activity, the current research suggests that Canadians in the market are likely to proceed carefully, closely watching for future developments before committing to major decisions related to buying, selling, or mortgage renewals,” Abacus stated.
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