{"id":25098,"date":"2025-01-07T11:11:24","date_gmt":"2025-01-07T19:11:24","guid":{"rendered":"https:\/\/www.roryc.ca\/blog\/?p=25098"},"modified":"2025-01-07T08:59:50","modified_gmt":"2025-01-07T16:59:50","slug":"housing-affordability-jumps-with-bank-of-canada-rate-cuts-new-mortgage-policies","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2025\/01\/housing-affordability-jumps-with-bank-of-canada-rate-cuts-new-mortgage-policies\/","title":{"rendered":"Housing Affordability Jumps with Bank of Canada Rate Cuts &#038; New Mortgage Policies"},"content":{"rendered":"<p style=\"text-align: justify;\">The Bank of Canada expects that there will be more activity in the country\u2019s real estate market, spurred by the central bank\u2019s latest interest-rate cut and easier mortgage policies set to take effect this weekend.<\/p>\n<p style=\"text-align: justify;\">The bank\u2019s 50-basis-point cut, which reduced interest rates to 3.25% on Wednesday, was its fifth cut since June. The lower interest rates have reduced the cost of borrowing and have helped prospective homebuyers qualify for a mortgage.<\/p>\n<p style=\"text-align: justify;\">As more homebuyers have waded back into the market, sales have been slowly moving up. The most recent national sales data show transactions in October at their highest level in more than two years.<\/p>\n<p style=\"text-align: justify;\">In addition to cheaper home loans, the federal government\u2019s looser mortgage policies will take effect Sunday. The new rules will allow all buyers to put down smaller down payments on homes that cost up to $1.5-million and will allow first-time homebuyers to pay off their loan over a longer period of time.<\/p>\n<p style=\"text-align: justify;\">\u201cThere are some mortgage rule changes to come, another 50-basis-point cut. We know housing is very sensitive to interest rates, so we do expect some more pickup,\u201d Bank of Canada senior deputy governor Carolyn Rogers said at a news conference to discuss Wednesday\u2019s interest-rate announcement.<\/p>\n<p style=\"text-align: justify;\">Her view is similar to many in the real estate industry, who expect sales to continue climbing next year.<\/p>\n<p style=\"text-align: justify;\">The lower interest rates and new mortgage rules will be in place before spring, which historically has been the busiest season for real estate sales.<\/p>\n<p style=\"text-align: justify;\">Under the new rules, first-time homebuyers who take out an insured mortgage will be allowed to repay or amortize their loan over 30 years instead of 25 years. That would lower monthly payments because the borrower has more time to pay off the loan.<\/p>\n<p style=\"text-align: justify;\">A homebuyer must pay for mortgage insurance if their down payment is less than 20% of the home\u2019s purchase price. The insurance protects the lender if the borrower defaults on their payment. Because an insured mortgage guarantees that the lender will not lose money, lenders are willing to offer lower interest rates on insured mortgages.<\/p>\n<p style=\"text-align: justify;\">Christopher Alexander, president of Re\/Max Canada, said first-time buyers have been waiting for the rule changes. \u201cThey have done the math and their affordability jumps dramatically,\u201d he said.<\/p>\n<p style=\"text-align: justify;\">Ms. Rogers has previously warned that steps to reduce a borrower\u2019s short-term cost can increase their long-term costs.<\/p>\n<p style=\"text-align: justify;\">At the Wednesday press conference, Ms. Rogers said it is possible that the federal government\u2019s decision to admit fewer newcomers may act as a \u201ccounterbalance\u201d on the easier homebuying conditions.<\/p>\n<p style=\"text-align: justify;\">She also noted that home sales have increased without a corresponding rise in prices. \u201cAn increase in activity without an increase in price is a good thing for the Canadian economy right now,\u201d she said.<\/p>\n<p><a href=\"https:\/\/www.theglobeandmail.com\/business\/article-bank-of-canada-expects-home-sales-to-pick-up-with-latest-rate-cut-new\/\" target=\"_blank\" rel=\"noopener\">Bank of Canada Expects Home Sales to Pick Up with Latest Rate Cut, New Mortgage Rules<\/a> by Rachelle Yonglai | The Globe and Mail | BIV<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Bank of Canada expects that there will be more activity in the country\u2019s real estate market, spurred by the central bank\u2019s latest interest-rate cut and easier mortgage policies set &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2025\/01\/housing-affordability-jumps-with-bank-of-canada-rate-cuts-new-mortgage-policies\/\">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":[9,13],"tags":[],"class_list":["post-25098","post","type-post","status-publish","format-standard","hentry","category-mortgage","category-real-estate"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.7 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Housing Affordability Jumps with Bank of Canada Rate Cuts &amp; New Mortgage Policies &#8226; 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\/2025\/01\/housing-affordability-jumps-with-bank-of-canada-rate-cuts-new-mortgage-policies\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Housing Affordability Jumps with Bank of Canada Rate Cuts &amp; 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