B.C. housing starts, sales should increase after interest rate cut: experts

B.C. economists predict today’s cut in a key interest rate will stimulate both the construction and sale of housing.The Bank of Canada Wednesday announced it would cut the policy interest rate by 0.25 per cent to 4.75 per cent. It is the first cut since March 2020 when the emerging COVID-19 pandemic saw countries around the world cut interest rates to dampen an economic downturn.

Brendon Ogmundson, chief economist with the British Columbia Real Estate Association, predicts the cut will have a positive effect on the demand side. “We are already seeing a bit of an uptick in smaller markets around the province, but I suspect this move may help the Lower Mainland and Interior markets in coming months,” Ogmundson said.

“As a result, -year fixed mortgage rates have likely already priced in the entirety of expected rate cuts,” Ogmundson said. It will also take some time for variable rates to fall under the average 5-year fixed rate, he added. But Ottawa is closer to Washington, D.C. than Frankfurt and Lee said the Bank of Canada needs to be mindful of policy decisions in the United States, Canada’s closest trading partner.

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