{"id":23201,"date":"2024-01-10T10:10:00","date_gmt":"2024-01-10T18:10:00","guid":{"rendered":"https:\/\/www.roryc.ca\/blog\/?p=23201"},"modified":"2024-01-09T14:20:09","modified_gmt":"2024-01-09T22:20:09","slug":"strong-spring-housing-market-with-expected-rate-cut","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2024\/01\/strong-spring-housing-market-with-expected-rate-cut\/","title":{"rendered":"Strong Spring Housing Market with Expected Rate Cut"},"content":{"rendered":"

TD Economics is calling 2024 ‘\u201cthe year of the cut\u201d in Canada, with markets pricing the first interest rate cut as soon as April.<\/p>\n

In a note from Friday, TD\u2019s Marc Ercolao writes that the Bank of Canada (BoC) is expected to bring the policy rate \u2014 which currently sits at a 22-year high of 5% \u2014 down to 3.5% by the end of 2024.<\/p>\n

That figure is \u201cslightly lower than market expectations of 3.75%,\u201d but also \u201cnotably tighter than pre-pandemic levels,\u201d Ercolao adds.<\/p>\n

Although Ercolao says there is plenty of proof that the BoC\u2019s policy of quantitative tightening has been working \u2014 he notes that \u201cconsumers are reeling in their spending, and growth is evolving in a manner consistent with inflation inching closer to the BoC’s 2% target\u201d \u2014 he cautions that we\u2019re not out of the woods quite yet.<\/p>\n

\u201cInflation remains elevated and wage growth is still running hot,\u201d Ercolao writes. \u201cThus, we sit at a critical crossroads between prematurely cutting rates and potentially reigniting inflation, or keeping conditions too tight, causing more economic pain than necessary.\u201d<\/p>\n

Speaking specifically to inflation, Ercolao warns that the next reading, slated for January 17, could see the metric \u201caccelerate on the back of base effects that saw weak inflation a year ago.\u201d Even so, he notes that inflation is \u201ctrending in the right direction\u201d and is expected to \u201cdurably break below the 3% level in 2024.\u201d<\/p>\n

On the housing front, Ercolao points out that Canadian housing markets saw \u201ctightening conditions\u201d and showed \u201csurprising strength\u201d as 2023 drew to a close, citing the latest data from local real estate boards. He adds that markets across the country could be in for a \u201cseasonally strong spring,\u201d which would \u201cfall directly in line\u201d with the expected timing of the first interest rate cut.<\/p>\n

Ercolao\u2019s sentiments on the spring market seem to be well-founded. Canadian Real Estate Association Senior Economist Shaun Cathcart said last month that this spring is poised to be \u201cmore active\u201d than previously expected.<\/p>\n

It certainly helps that borrowing costs are already coming down. BMO Economist Robert Kavcic wrote in a recent note that they may have already peaked now that the BoC\u2019s tightening cycle seems to be in the rearview.<\/p>\n

To his point, lenders like Equitable Bank, THINK Financial, and MCAP have already dropped their five-year fixed rates below 5%. Kavic notes that with five-year GoC yields having crumbled by around 115 basis points from the early October high, fixed mortgage rates will likely come down further as 2024 progresses. Variable-rate mortgages are expected to follow suit as the bank drops the policy rate.<\/p>\n

Canadian Housing Markets Could See \u201cSeasonally Strong Spring” with Expected Rate Cut<\/a> by Zakiya Kassam | Storeys<\/p>\n","protected":false},"excerpt":{"rendered":"

TD Economics is calling 2024 ‘\u201cthe year of the cut\u201d in Canada, with markets pricing the first interest rate cut as soon as April. In a note from Friday, TD\u2019s … [read more<\/a>]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8,13],"tags":[],"class_list":["post-23201","post","type-post","status-publish","format-standard","hentry","category-market-updates","category-real-estate"],"yoast_head":"\nStrong Spring Housing Market with Expected Rate Cut • Rory C Real Estate | Oakwyn Realty<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.roryc.ca\/blog\/2024\/01\/strong-spring-housing-market-with-expected-rate-cut\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Strong Spring Housing Market with Expected Rate Cut • Rory C Real Estate | Oakwyn Realty\" \/>\n<meta name=\"twitter:description\" content=\"TD Economics is calling 2024 ‘\u201cthe year of the cut\u201d in Canada, with markets pricing the first interest rate cut as soon as April. 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