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Canadian Real Estate Faces Headwinds Despite Rate Cuts



Despite anticipated rate cuts, Canada's real estate market remains sluggish, according to a BMO analysis. The Bank of Canada’s rate reduction is expected to boost sentiment but not significantly improve affordability. 


Robert Kavcic, BMO's senior economist, notes that most borrowers have shifted to fixed-rate mortgages, minimizing the impact of variable-rate changes. Fixed-rate loans already offer about 125 basis points of value, with 90% of new loans over the past year being fixed-rate. 



The market is further constrained by surging inventory and strained affordability. Home sales in Toronto and Vancouver dropped by 20% last month, signaling continued market challenges.






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