Interest rate cut will give buyers confidence: local real estate experts

Wednesday’s Bank of Canada interest rate cut of 50 basis points may not show true change in the London region’s housing market until as late as next spring. That’s according to local real estate experts, who also say that the cut will give more would be buyers the confidence to take the plunge.

“I think it’s going to ignite the local market,” said Mortgage Broker Mike Hattim of Dominion Lending Centres. “I think people’s confidence in affordability is going to grow. I’m getting a lot of calls now. People are calling - existing clients, new clients calling asking about rates, asking what it could do for them, recalculating their numbers. So, I do think that there’s going to be a little bit of momentum in the market,” he said.

The Bank of Canada’s benchmark interest rate cut is the fourth consecutive decrease since June, bringing the policy rate to 3.75 per cent. Officials with the London St. Thomas Real Estate Association (LSTAR) call it a positive move, but CEO Bill Madder said the impact to the local market won’t happen overnight.

 “I don’t think it will be a huge one right now. I think we’re actually just seeing the impact of the previous several drops showing up right now. There’s a ways to go in our marketplace still. It’ll be 2025 before it really significantly affects the market,” said Madder.

In September, home sales in the London-St. Thomas market were on the rise, with 562 homes sold. That represents a six per cent increase over the same period one year earlier.

LSTAR Board Chair Kathy Amess said that the rate cut could be the final push needed for those on the fence about buying.

“It’s a pretty nerve-wracking experience spending a few hundred thousand dollars, so you want to make sure that you feel comfortable doing that,” said Amess. She added that she believes there’s a misconception that interest rates have been unusually high, but that’s not the case. “Historically our rates right now are pretty low compared to the average over the last 30 years,” she explained.