Prospective buyers will be forced to the sidelines while bracing for the impact of higher rates, observers say
The recent deceleration in Canada’s housing market activity is about to intensify as higher borrowing rates continue to price would-be buyers out of the market, according to industry players
The latest figures from the Canadian Real Estate Association showed that total home sales across the country dropped by 5.3% between June and July, representing the fifth straight month of slowdown. Sales activity declined in three-quarters of all local markets during that month, CREA said.
At present, no signs of relief for borrowers are apparent, with the Office of the Superintendent of Financial Institutions insisting that it will not give in to sectors calling for the easing of the stress test.
“Borrowing power is going to be reduced once again,” Toronto-based brokerage CEO Don Scott told The Globe and Mail.
Read more: Canada housing market – what direction is it headed in?
Scott estimated that the lowest variable-rate offerings may soon reach 4.35%, and the lowest five-year fixed-rate products will exceed 5%.
“We see the downturn intensifying and spreading as buyers take a wait-and-see approach while ascertaining the impact of higher lending rates,” said RBC’s Robert Hogue.
