Canada’s housing market continues to slow down with August marking the second consecutive month of declining home sales. Tight demand and supply conditions have also eased, slowing home prices’ pace of growth. Inflation increased to 4% in August, up from 3.3 % in July, posing a persistent challenge for the economy and the Bank of Canada.
Despite the larger-than-expected rise in inflation, the Bank of Canada says that such “ups and downs” are not unexpected. And while they are mindful that past rate hikes will continue to work their way through the economy, they are still prepared to raise the policy interest rate further if needed. The next Bank of Canada rate announcement is scheduled for October 25th and there will be another inflation report before then.
High mortgage interest rates are expected to continue to be a challenge for potential buyers and homeowners. According to Mortgage Professionals Canada’s latest SemiAnnual State of the Housing Market Report, half of non-homeowners in Canada think they may never be able to buy a home in the current market. The report also indicates that one in five mortgage holders are facing renewal in the next year, with many anxious about the effect on their payments given the higher rates. Furthermore, the
number of homeowners who are considering selling because they cannot afford their current mortgage has increased more than three-fold compared to the previous year.
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