Inflation remains high, however, it is trending downward and moving closer to the Bank of Canada’s (BoC) goal of 2%. This has led the BoC to announce today that it is holding its policy interest rate again at 4.50%.

Now that the spring market is in full swing, what does the rate announcement mean for prospective buyers and sellers?

Good News for Buyers : Fixed Rates are Trending Down

The spring market tends to be one of the busiest times of year for Canadian real estate markets. Prospective buyers and sellers often come to market following March break and the Easter long weekend and during this time, fixed mortgage rates have been trending downward. “Fixed mortgage rates have been trending lower because bond yields have stabilized as fears of a global banking meltdown have dissipated,” explains James Laird, Co-CEO of Ratehub.ca and President of CanWise mortgage lender. “After March break is when lenders tend to come out with their spring mortgage promotions, which is also helping with the downward pressure on rates,” Laird continues.

Sellers : Lack of Inventory is Keeping Prices High and Competition Steep

The Toronto region real estate market is already seeing the influence of spring as sales, average prices, and new listings all rose last month. Although the Toronto Regional Real Estate Board (TRREB) reported that new listings increased 33.7% month-over-month, reaching over 11,000 new listings for the first time since September 2022, inventory remains below long-term averages in many Canadian markets.

The combination of market interest and competition increasing coupled with low inventory is causing home prices to increase. “Home prices have stabilized and are trending upwards due to falling mortgage rates and lack of housing supply,” says Laird. In March, homes were spending an average of 27 days on market in the Toronto region, however, properties in some cities including Ajax, Pickering, and Whitby were spending just 15 days or less on market last month indicating that sellers are benefiting from market conditions.

BoC : Interest Rates Remain on Pause. What It Means for Prospective Buyers and Sellers by Patti Cosgarea | zoocasa