Home sales in Toronto were rebounding this spring before the Bank of Canada announced another increase to its key interest rate
For many buyers and sellers immersed in the spring rejuvenation of the Toronto-area real estate market, the Bank of Canada’s recent interest rate hike came as a sudden jolt.to 4.75 per cent in June after recent data showed the country’s economic growth was surprisingly robust in the first quarter. The Bank of Canada had paused a series of rate hikes earlier this year as the rate of inflation fell towards its target rate of two per cent but it has remained stubbornly high.
“That’s a very risky position for most young buyers to be in,” she said. “If you’ve got a preapproval in hand, go out and do your shopping.” Pritesh Parekh, real estate agent with Century 21 Legacy Ltd., said the announcement was a surprise for many. For investors who bought in early 2022, their monthly cash flow was manageable, but now they’ve seen nine interest rate increases from the Bank of Canada.
Sales in the Greater Toronto Area jumped 24.7 per cent in May compared with the same month last year, according to the Toronto Regional Real Estate Board. New listings fell 18.7 per cent last month from May, 2022.In May, the shortfall in supply compared with demand led to more competition in the GTA, according to TRREB chief market analyst Jason Mercer.
When it comes to existing homeowners, Mr. Lusink said banks have so far softened the impact by allowing many customers to extend the amortization period from the typical 25 years to 35 or 40 years in some cases.
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