As we approach the Bank of Canada’s anticipated rate announcement on January 29, 2025, it’s a good time to quickly look back at the rate cuts of 2024 and what they’ve meant for the Toronto real estate market. After several hikes in the previous years, the Bank of Canada started cutting rates in 2024 to support economic growth and help bring inflation under control.
2024 Rate Cuts in Brief
In 2024, the Bank of Canada reduced rates multiple times. Here’s a quick recap:
| Date | Target Rate (%) | Change (%) |
|---|---|---|
| December 11, 2024 | 3.25 | -0.50 |
| October 23, 2024 | 3.75 | -0.50 |
| September 4, 2024 | 4.25 | -0.25 |
| July 24, 2024 | 4.50 | -0.25 |
| June 5, 2024 | 4.75 | -0.25 |
These cuts have already made a significant impact, especially in Toronto’s competitive real estate market, as lower mortgage rates have made homeownership more accessible to buyers.
Looking forward: What to expect
So, what’s coming tomorrow? The big question on everyone’s mind is whether the Bank of Canada will announce another rate cut, potentially dropping the policy rate to 3.00%. Here’s why many experts expect a cut and what it could mean for Toronto real estate:
Ongoing Inflation Control: While inflation has been cooling, it’s still a factor the Bank needs to manage. However, with inflation showing signs of stabilization, the Bank has room to ease further to encourage economic growth.
Economic Growth & Consumer Confidence: Canada’s economy has demonstrated resilience in recent months, but certain sectors (like exports and manufacturing) are still struggling. Lower interest rates would provide further support for consumer spending and business investment.
Housing Market Dynamics: With Toronto’s real estate market still seeing high demand and limited inventory, a rate cut tomorrow could keep the momentum going. Buyers would benefit from more affordable financing options, while sellers could see more motivated buyers competing for homes, especially in highly desirable neighbourhoods.
What this means for Toronto real estate
If the Bank of Canada cuts rates tomorrow, Toronto’s real estate market is likely to heat up. Here’s how both buyers and sellers could be impacted:
- For Buyers: Lower rates mean more affordable mortgage options. First-time buyers in particular might feel more confident about jumping into the market. However, with inventory still tight, competition will remain fierce in sought-after areas, so buyers will need to act quickly.
- For Sellers: With more buyers in the market, sellers could see faster sales and possibly even higher offers, especially in neighborhoods with limited inventory. If you’ve been thinking about selling, now might be the time to list!
Looking Ahead to 2025
While the potential rate cut could have immediate effects on Toronto’s housing market, the bigger picture for 2025 will depend on how the economy continues to evolve. If inflation remains stable and economic growth continues, the Bank of Canada may maintain its current rate level, avoiding further cuts. However, the Bank is likely to remain cautious and responsive, adjusting rates only as needed to support economic stability.
Have questions about how this might impact you? Contact one of our trusted and experienced agents today. We’re ready to help!
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