Real estate industry left playing the waiting game after Bank of Canada hold

financialpost.com:

The Bank of Canada’s decision to keep its key overnight interest rate steady at five per cent for the fourth time was widely expected by the real estate sector, but whether it will be enough to bring buyers back to the market remains up for debate.

“(The) decision to hold rates is certainly a welcomed one for many Canadian homebuyers,” ReMax Canada president Christopher Alexander said in response to the central bank’s Jan. 24 announcement.

Alexander, who pointed to the rush into the market in the early days of the pandemic, said he is hopeful the hold will be enough to induce more activity, “especially for those that have been taking a ‘wait and see’ approach and are waiting for the right time to re-enter the market.”

Mortgage strategist Robert McLister, however, pointed to a different recent historical precedent.

“Last January we saw CREA’s average home price rocket 19 per cent in just five months following the bank’s first rate pause. That’s an extraordinary move,” McLister said. “Will we see the same this spring? It’s not the expectation but if mortgage rates slide into the mid-to-low-four-per-cent range, I sure as heck wouldn’t bet against it.”

James Laird, co-CEO of Ratehub.ca and president of CanWise mortgage lender, said if the central bank had revealed specifics about a cut that would have jump-started the housing market.

“Any indication of rate cuts from the Bank of Canada would have put upward pressure on home prices immediately,” he said.

Without them, there could be a shift in the opposite direction, given that lenders had been holding off raising mortgage rates after the recent rise in bond yields.

“Lenders will consider moving fixed rates higher since there is no new information from the bank,” Laird said.