What This Means for Your Real Estate and Mortgages
CIBC’s top economists have forecast significant interest rate cuts from the Bank of Canada (BoC) by the end of 2024, predicting reductions of up to 50 basis points per meeting in December and January. This could mark a rapid shift from the rate hikes Canadians have seen in recent years. If these forecasts hold true, we may see the BoC’s benchmark interest rate drop to as low as 3% by early 2025. This aligns with the CIBC rate cut forecast 2024.
What Does This Mean for Homeowners and Buyers?
Mortgage Relief in Sight:
For existing homeowners with variable-rate mortgages or those up for renewal, this is welcome news. Interest rate cuts will directly translate into lower monthly payments, helping ease the financial pressure from the rapid rate hikes over the last two years. However, for those with fixed-rate mortgages, the effects won’t be immediate. Fixed-rate borrowers will need to wait until their term ends to benefit from lower rates when they renew their mortgages as projected in the CIBC rate cut forecast 2024.
The forecasted rate cuts could also be a breath of fresh air for first-time homebuyers. Lower interest rates make borrowing more affordable, reducing the overall cost of purchasing a home. This is especially important given how high borrowing costs have priced many Canadians out of the market in recent years. The CIBC rate cut forecast 2024 indicates a potentially favorable market for new buyers.
Boost for Real Estate Market:
A reduction in rates could provide a much-needed boost to the Canadian real estate market, which has seen a slowdown in activity due to high borrowing costs. Lower rates make homeownership more accessible, which can help reinvigorate demand. In turn, this can create upward momentum in property prices, benefiting sellers who have seen softer market conditions throughout 2023 and 2024.
At the same time, it’s important to remember that while lower interest rates typically stimulate the housing market, they also might not immediately counter the affordability challenges brought on by high property prices in markets like Vancouver and Toronto.
What Should You Do Next?
With CIBC forecasting substantial rate cuts, now is the time for homeowners and potential buyers to start planning. Here are some steps you can take:
- Homeowners with Variable-Rate Mortgages: Expect some relief as your interest rates may adjust downward. Speak to your lender about how these changes could affect your payments.
- Those Renewing Their Mortgages: If your mortgage term is up for renewal soon, you may want to explore shorter-term fixed-rate options to take advantage of the potential for lower rates in the near future.
- First-Time Buyers: Keep a close eye on rate movements. As interest rates decrease, your buying power will increase, making this a more favorable time to enter the market.
- Investors: Rate cuts could stimulate more activity in real estate, so it may be wise to consider property investments before rates bottom out and property prices rise.
CIBC’s economic team has stated that inflation is beginning to slow, and with real estate being one of the most interest-sensitive sectors, these changes and the CIBC rate cut forecast 2024 could reshape the landscape for both buyers and sellers in the coming months(BNN Bloomberg)(Daily Hive YVR).
Book your appointment with us today and get personalized advice on your real estate or mortgage queries. Let’s make sure you’re prepared for what’s next!