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In response to escalating borrowing costs over the past two years, a significant portion of Canadians have been forced to reassess their ambitions of homeownership. According to a recent survey 27 percent of Canadian adults have been actively engaged in the housing market since the Bank of Canada commenced its key lending rate hikes in March 2022. However, a staggering 56 percent of these prospective buyers have had to defer their property searches due to the substantial surge in interest rates, underscoring the formidable impact of financial constraints on housing aspirations.

Anticipation looms as the rate of inflation approaches the coveted 2 percent threshold, hinting at potential relief for variable-rate mortgage holders and individuals compelled to postpone their home purchasing endeavors. With projections suggesting an impending cut to the overnight lending rate later this year, 51 percent of those who delayed their property acquisitions express intentions to resume their search if interest rates exhibit a downward trajectory. Notably, varying thresholds for rate reductions are discerned among respondents, with 10 percent awaiting a modest 25-basis-point reduction, while a substantial 23 percent mandate a cut exceeding 100 basis points before reconsidering their homebuying pursuits.

Emphasizing the pivotal role of buyer confidence, industry experts note the intricate interplay between perceived property values and prevailing economic conditions. President and CEO Phil Soper anticipates a resurgence in buyer demand once indications of forthcoming rate cuts emerge. Notwithstanding the adverse effects of rate hikes, 65 percent of sidelined buyers exhibit sustained engagement in the homebuying process, indicative of the enduring allure of homeownership amidst fluctuating economic landscapes.

Read the full article on: REAL ESTATE MAGAZINE