WATCH: Reid Fiest explains how a cut in rates could impact homebuyers.
With fears lower energy prices will hurt Canadian real estate values, a cut to the Bank of Canada’s key rate may be what keeps the market on track.
Calgary realtor John Mayberry said the drop may persuade some to buy.
“For a while now we’ve been talking about rates going up, and that it’s inevitable for them to go up,” Mayberry told Global News. “I think a lot of people who were on the fence are going to say, ‘Why not take advantage of it?'”
READ MORE: Loonie continues to tumble, Bank of Canada chops key rate
Mortgage broker Croft Axsen has seen it all in his career, but he said the cut is a shock.
Lately, his business has seen a drop in new mortgages amid uncertainty over low oil prices.
Axsen said it could be good for business, and the economy, if the banks follow with lower mortgage rates.
“Are they going to adjust and give a little bit back to the consumer? We’ll have to see what happens with that. Once one lender drops, they tend to compete,” said Axsen.
READ MORE: Rate cut isn’t a green light for consumers to borrow more: experts
CIBC economist Nick Exarhos say variable rate mortgages will see the effect first.
Fixed rates could drop by 0.2 per cent, keeping most mortgages below 3 per cent.
“So obviously that should spill over into savings that borrowers will be able to capitalize on going forward this year if they choose to refinance,” says Exarhos.
While that may be good news for buyers, the worry is that could push many Canadians, already swimming in debt, over the edge.
It’s a warning the Bank of Canada had been sounding for years, but now the price of oil seems to be its bigger concern.
“We’ve had low rates for such a long time, you get into the mentality you believe that rates are always going to be low,” said Axsen. “At some point they’re going to go up.”
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