How will the real estate market be impacted by Bank of Canada rate cut?

Experts are weighing in on how the real estate market will be impacted by the Bank of Canada rate cut this week.

In the face of a tariff war with the U.S., the Bank of Canada opted to lower the interest rate to 2.75 per cent.

The Bank noted the economic uncertainty in its decision and said “heightened trade tensions and tariffs imposed by the United States will likely slow the pace of economic activity and increase inflationary pressures in Canada.”

The last time the overnight lending rate was below three per cent was in September 2022.

So, how will the rate cut impact the real estate market?

Lower rates will mean more favourable monthly payments and greater loan accessibility, said real estate company Coldwell Banker.

For sellers, it could represent a window of opportunity to list their properties at a time when interest rates make real estate more attractive to buyers.

“This dynamic could lead to heightened competition in certain markets, further driving up demand for homes,” Coldwell Banker said.

But one recent survey conducted for the Canadian real estate agency Zown found 49 per cent of non-homeowners in Canada are still not willing to purchase a home even with anticipated interest cuts.

Phil Soper, president and CEO of Royal LePage, indicated this seventh consecutive rate cut could boost sales.

“In an increasingly turbulent economic environment, this series of rate decreases presents an opening to aspiring homebuyers and those approaching their mortgage renewal,” said Phil Soper, president and CEO of Royal LePage in an email.

Soper acknowledges that the ongoing trade tensions could impact buyers decisions but said the bank will likely continue to lower interest rates to stimulate the economy.

“Additional rate cuts may be on the horizon as policymakers work to maintain stability,” Soper said. “The housing market, while it may see a temporary slowdown in activity, remains largely insulated from trade disputes, ensuring its resilience in the long term.”

Real estate brokerage Zoocasa noted that leading up to the threat of U.S. tariffs on most Canadian goods in early March, home buyers were taking a step back from the market.

Both sales and prices decreased last month in the GTA. In February, there were 4,037 home sales through MLS—down by 27.4 per cent compared to February 2024, according to the Toronto Regional Real Estate Board. The average selling price, at $1,084,547, was down by 2.2 per cent compared to February 2024.

But compared with January, the average listing days on the market have dropped for the Toronto region, from 37 to 28 days, Zoocasa noted.

“A faster turnaround time indicates that the market is still active for well-priced listings,” Zoocasa said.

Economic instability may deter some home buyers this spring, which could result in less competition, more choice, and improved affordability, Zoocasa said.

“Although competition may fluctuate, sellers of in-demand properties in good neighbourhoods will likely continue to attract buyers throughout the spring market,” Zoocasa said.