Bank of Canada's latest rate cut good for future homeowners: Royal LePage CEO

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The Bank of Canada’s overnight interest rate cut by 0.25% to 3% is good news for prospective Toronto homeowners said Phil Soper, president and CEO of Royal LePage.

“In Toronto, the price of detached homes has been a challenge for generations going back to gen X,” said Soper.

“What makes the current time a little unusual, certainly unusual in the last quarter-century, is we’ve actually had affordability improving for the last three years and sharply for the last 10 months. So home prices have been flat or declining in the case of condominiums for a three years now and money’s been getting cheaper now for about 10 months. And wages and salaries have been climbing during that time, therefore the math leads to one of those rare windows where affordability has actually improved in 2023 and during 2024 and at this point it’s continuing in early 2025.”

As for across Canada, Soper sees the same scenario with the exception of Atlantic Canada, Quebec City and Alberta because “they buck the trend and home prices started increasing there in 2024. But in the case of Alberta, wages and salaries grew at a faster rate than home prices did.”

Soper said it also helps that this latest Bank of Canada decrease arrived just before the spring housing market – when demand typically picks up.

“We’re coming into the busiest time of the year,” he said. “I think (the rate cut) will be one of four will see this year. And we saw a total of this size of six (so far). So we’re on a continuous trend towards cheaper buying and the governor of the Bank of Canada said that the focus had shifted away from inflation fighting, which was why rates rose in the first place, to economic stability — sort of supporting the economy.”

The next Bank of Canada rate announcement is expected on March 12.

Soper said the looming 25% tariffs by the United States can cause lending rates to go up or down “depending on what you think will happen. If you think Canada will slap tariffs on American imports, then rates could potentially go up. I’m in the camp that believes the Trump tariffs are a real threat to the Canadian economy and a better metaphor would be the COVID-19 pandemic, where the bank had to use monetary policy to shore up unsolds (properties built but not yet purchased) and businesses to give them strength to soldier through this threat to our economy. So I believe, if anything, the Trump tariffs will force rates to move down faster.”

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