As the Royal Bank of Canada leads other major banks in lowering five-year fixed mortgage rates, some industry experts believe there won’t be much of an impact on how the housing market performs in 2015.
“I don’t believe a quarter-point will make a significant difference,” said Justin Kua, a real estate agent in Toronto. “First-time buyers are already expecting low rates. It’s just giving people a little more confidence in being able to take on a mortgage.”
Over the weekend, the Royal Bank of Canada dropped its five-year fixed rate mortgage to just 2.84 per cent.
Kua said he expects the market in 2015 to pick up where last year left off, with low inventory being the driving force behind the hot market.
“The market is going to be active whether interest rates are high or low,” he says. “Growing families still need to upsize and seniors still need to downsize.”
With that said, though, Kua is encouraging his clients to take advantage of a lower rate.
“If a client wants to move up and can afford a detached house now, I highly recommend it,” he said.
“It’s way cheaper now than it will be down the line. But, buyers should be proactive in paying down the mortgage, because while it’s cheap now, you have to be aware that higher rates are coming. Don’t sit on a huge mortgage assuming rates are going to stay low forever.”