In its last announcement of the year, the Bank of Canada made another supersized cut to its key lending rate.
In its scheduled December 2024 release, the central bank announced that it had lowered the target for the overnight lending rate by 50 basis points to reach 3.25%. This marks the fifth consecutive cut to rates in 2024, and the second consecutive 50-basis-point cut.
With lower borrowing rates comes the likelihood of more robust activity throughout the winter months and an earlier-than-normal spring market, leading to upward pressure on home prices.
According to the Royal LePage 2025 Market Survey Forecast, the aggregate price of a home in Canada is set to increase 6.0% year over year to $856,692 in the fourth quarter of 2025, with the median price of a single-family detached property and condominium projected to increase 7.0% and 3.5% to $900,833 and $605,993, respectively. Sidelined buyers are being encouraged back to the market
This latest significant rate cut will help to sustain activity throughout the winter months, typically the slowest period for real estate transactions in Canada,” said Phil Soper, president and CEO of Royal LePage. “Buyers have woken up to the reality that property prices are rising again, and more will feel an urgency to act before affordability erodes. As a result, we are anticipating a ‘pull-ahead’ of activity and an early start to the traditional spring housing market. Adding to this momentum is the change in lending policies that come into effect on December 15th, which we believe will coax more sidelined purchasers to take advantage of their expanded borrowing power.”
The Bank of Canada will make its next interest rate announcement on Wednesday, January 29, 2025.
It’s time to buy. Slightly lower rates, decent inventory, get off the fence; if you wait then you will be competing with many more buyers.
