On September 17, the Bank of Canada is expected to announce whether it will cut its key interest rate. Most economists are betting on a 25 basis point drop (from 2.75% to 2.5%).
This decision comes after some worrying economic news—Canada lost 66,000 jobs in August, unemployment ticked up to 7.1%, and growth has slowed. Lowering rates is one way the Bank tries to stimulate the economy by making borrowing cheaper.
But the real question for many people here in Abbotsford is: what does this mean for the housing market?
Lower Rates Could Help Buyers Afford More
If the Bank of Canada does cut rates, home buyers with variable-rate mortgages will likely see their payments go down. Lower borrowing costs can also make it easier to qualify for a mortgage, giving buyers a bit more purchasing power.
Fixed-rate borrowers could benefit too—bond yields (which influence fixed rates) have been dropping in anticipation of easier monetary policy. That means lenders may lower their fixed mortgage rates as well.
For buyers who’ve been waiting on the sidelines, this September decision could make entering the market more attractive.
Sellers Could See More Demand
For homeowners looking to sell, a rate cut can work in your favor. Lower rates typically bring more buyers into the market, which means more showings, more offers, and in some cases, higher selling prices.
This is especially helpful for anyone who’s been struggling to sell over the past few months. A fresh wave of buyers could be the push needed to get your home sold before year-end.
The Double-Edged Sword of Cheaper Borrowing
While cheaper mortgages sound great, there’s a catch. More buyers in the market means more competition, and that can drive prices up again—especially in markets with tight housing supply.
Even Bank of Canada Governor Tiff Macklem has admitted that monetary policy can’t fix the housing supply problem. Lower rates may help with affordability in the short term, but they can also spark bidding wars and rising prices if demand outpaces supply.
What Buyers and Sellers Should Do Now
- Buyers: A September rate cut could be your chance to secure a lower payment, but be ready for competition if demand rises. Getting pre-approved and knowing your budget ahead of time will give you an edge.
- Sellers: If you’ve been waiting to list, this fall could bring more motivated buyers into the market. Pricing your home right and showcasing its value will help you take advantage of the boost in demand.
Bottom Line
The September Bank of Canada decision is more than just financial news—it could directly impact how much house you can afford or how quickly your home sells. Lower rates may provide short-term relief and opportunities, but they could also reignite competition in the market.
As always, if you’re considering buying or selling a home in Abbotsford, feel free to reach out to us here. We’re here to help you navigate these changing mortgage rules and make the best decision for your financial goals.