Bank of Canada Lowers Rates by 50 Points: What This Means for Buyers, Sellers, and Investors

Oct 24

By Owen Kennedy, Real Estate Agent at New Purveyors, RE/MAX Hallmark

On October 23, 2024, the Bank of Canada announced a 50-point interest rate cut, which is big news for anyone involved in real estate, whether you're buying, selling, or investing. Here’s my take on what this rate drop means and how it could impact the Ottawa real estate market.

Fewer Listings from COVID-Era Buyers

For anyone waiting for a flood of homes to hit the market from those who bought during the COVID-19 housing boom, this rate cut could be disappointing. Many expected higher interest rates to force some homeowners into selling, but with the cost of borrowing now lower, people are less inclined to sell their homes.

This means we likely won’t see a surge in listings from COVID-era buyers as some predicted. If you’re a buyer hoping for more options, the pool of available homes could remain limited, making it more important to act quickly when a suitable property comes on the market.

Increased Competition from Real Estate Investors

Lower borrowing costs aren’t just good news for homeowners—they’re also a green light for investors. Whenever rates drop, real estate becomes an even more attractive investment. With today's rate cut, we’re likely to see an increase in the number of investors entering the market.

For first-time homebuyers in Ottawa, this could mean facing tougher competition. Investors tend to drive up property values, and in some cases, this increased competition can push home prices up by as much as 10%. If you’ve been considering buying your first home, acting now could help you secure a property before prices climb further due to heightened investor interest.

The Importance of Getting Pre-Approved for a Mortgage

One of the most important things you can do right now is get pre-approved for a mortgage. With interest rates lower, this is the perfect time to figure out exactly how much home you can afford and lock in these favorable rates.

A mortgage pre-approval not only gives you a clear picture of your budget but also strengthens your buying power when you make an offer. Sellers are more likely to take offers from pre-approved buyers seriously, and in a competitive market, this can give you an edge.

Additionally, with Ottawa’s rental market still seeing high prices, the monthly cost of owning a home may now be lower than what many are paying in rent. If you’ve been renting, take this opportunity to compare the current cost of homeownership to your rent payments—you might find it more affordable to buy than you think, especially with lower interest rates.

What Does This Mean for the Ottawa Real Estate Market?

Ottawa has consistently been a strong market, and today’s rate cut is likely to make it even more competitive. We’ll see fewer homeowners selling, more investors buying, and greater competition among first-time buyers. If you’re thinking about buying, selling, or investing, now is a critical time to assess your options and act strategically.

The Bank of Canada’s 50-point rate cut is a major shift that will influence the real estate landscape in Ottawa and across Canada. Whether you’re a first-time homebuyer or an investor, the market is about to get even more dynamic. My advice: get pre-approved, stay informed, and act quickly to take advantage of these changes before the market becomes even more competitive.

If you have any questions or need advice on how to navigate the Ottawa real estate market in light of these changes, feel free to reach out. I’m always here to help!