“The drop in interest rates will mostly support the housing market, though investors now have even more reason to search for higher returns outside the fixed income market,” said Sal Guatieri, senior economist at BMO Capital Markets.
The BMO Home Buying Report
, published on Friday, found that 45 per cent of Canadians plan to purchase a home within the next five years, with 16 per cent saying the recent decrease in interest rates will allow them to afford a home sooner than anticipated.
Guatieri also noted that low rates improve affordability in Canada’s hotter urban markets. “Given the negative impact of lower oil prices on the Canadian economy, interest rates are likely to remain low for some time, supporting home sales – especially in Vancouver
where affordability is an issue,” he added.
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The Bank of Canada's interest rate cut will offer first-time real estate investors yet another reason to get into the market, says a leading economist.