Ontario homebuyers, homeowners react to the drop in interest rates

Jun 11, 2024 | GTA/Local News, News

The Bank of Canada lowered its standard interest rates by 25 basis points June 5. The current Interest rate stands at 4.75 per cent.

The rate cut received mixed reactions from Torontonians. Some people sounded hopeful, and others seemed to be on the fence about the changes the rate cut would make to the economy.

Those who owend homes in Toronto said they are hopeful toward the reduced mortgage rates and probable lowered monthly payments but fear property rates might shoot up due to more demands in the market.

Tiff Macklem, governor of the Bank of Canada, said in a press release the bank’s monetary policy no longer needs to be as restrictive.

“We’ve come a long way in the fight against inflation. And our confidence that inflation will continue to move closer to the two per cent target has increased over recent months,” he said.

“This all means restrictive monetary policy is working to relieve price pressures. In other words, it is appropriate to lower our policy interest rate.”

Rashi Chauhan who is poised to become a permanent resident of Canada, said she is hopeful about starting her life here and being able to at least think of buying a house shortly.

“Since the interest rates are now going down, all the people who want to purchase a house or wish on investing in property can plan accordingly,” she said.

The Royal Bank of Canada website posted the new interest rate of 4.75 per cent adn said it will inspire buyers to ramp up their home search efforts as confidence in the economy grows. If people are looking to buy, they will likely see an improvement in housing affordability and options.

Jatin Tilak Raj Gosaiwal, a recent home buyer, said in an interview with Humber News, this news comes as a blessing at the time the properties are so expensive and mortgage payments take a big chunk of your income.

“The Bank of Canada has taken a good decision by cutting down the rate of interest even if it’s just a slight change,” he said.

He said when the interest rates are high, the mortgage payments go mainly to paying the interest and very less of it pays the principal.

“With the low interest rates we might be able to put more amount on the principal amount which might help in paying the loan sooner than what was anticipated in the first place,” he said.

It’s no wonder people with mortgages greeted the news with open arms. An Equifax Canada report says mortgage delinquency rates have increased to 0.14 per cent from 0.09 per cent over the last year. But some looking to get into the market were not pleased.

Noor Baig, who has been living in Canada for the last 24 years, said the announcement by the Bank of Canada is more of a golden set of words than the reality.

Baig said the interest rate cut is helpful for businesses and homeowners who already own a place and have ongoing mortgages. But it does not encourage new buyers in any way.

“In Ontario, there are so many factors that go into even getting a house loan, and most of the new buyers can’t qualify for one because of low wage and credit scores,” she said.

“So I don’t think this announcement affects a lot of people.”