It's hard to believe that Canada's red-hot housing market could get any hotter.

But in cutting its key interest rate to 0.5 per cent on Wednesday, the Bank of Canada may have opened even more doors for Canadians who are looking to purchase big-ticket items, such as homes and cars.

Before Bank of Canada Governor Stephen Poloz announced the latest rate drop, the Canadian Real Estate Association said on Wednesday morning that its latest figures showed the number of monthly home sales in May and June had reached their highest levels in years.

The group pointed to low interest rates as the reason for buyer confidence.

And the central bank's move on Wednesday could offer even further opportunities to prospective buyers.

Reduced mortgage rates could prove to be too enticing, even as house prices continue to soar in major markets such as Toronto and Vancouver.

Many realtors predict that it will be first-time buyers with disposable income who will be able to take advantage.

Real estate lawyer Mark Woitzik told CTV News Channel that the rate cut will have a "big impact" and he is already seeing "unprecedented demand" at his office in Whitby, Ont.

"There has been a tremendous amount of multiple offers, houses going $30,000 or $40,000 over list (prices)," said Woitzik.

He added that if banks "match" the interest rate cut there will be a "whole new class of buyers" who will be drawn to the market.

"And it is already fuelled enough. This market is incredibly heated and if it drives up prices more it create issues that's for sure," said Woitzik.

TD Bank was the first major bank to respond to Poloz's announcement, reducing its prime rate to 2.75 per cent. The rate is used to set benchmarks for variable-rate mortgages, home equity lines of credit and other kinds of variable-rate borrowing.

Woitzik said the decrease will not result in "huge savings" for prospective buyers and lenders, but it will increase demand as investors in fixed-income funds seek higher returns through riskier avenues such as real estate or the stock markets.

The Royal Bank also reduced its prime-lending rate to 2.70 per cent.

However, some industry experts are skeptical that the historically low rates will result in more business.

"A drop of a quarter-percentage point isn't going to make a whole lot of difference, especially since the banks aren't passing on the entire rate cut," Gregory Klump, an economist for the Canadian Real Estate Association, told CTV News.

Toronto realtor Jill Lubinski says that the city's housing market is already hot, but she doesn't believe the Bank of Canada's rate cut will necessarily result in more sales.

"Just because our clients can spend more, doesn't mean they do. Just because they can qualify for a bigger mortgage, doesn't mean they do," said Lubinski.

Results from a CIBC poll released on Tuesday echoed Lubinski's statement.

Only seven per cent of participants said they would be willing to take on more debt if rates were lowered.

And 60 per cent said that the change would have no impact on them.

Other Canadians may be using low lending rates to eye other pricey items such as cars, despite the fact that Canadian households have reached record levels of debt. Some car dealerships are taking advantage and offering zero per cent financing.

But consumer advocates are warning that these conditions won't last forever.

"Anyone who is borrowing now, let's say a five-year term might be facing a very different interest reality when it comes time for renewal," said Penelope Graham, editor of

The change could also mean trouble for many homeowners.

"And these buyers who own properties have only known those (low) rates and I keep reminding them when they come in to take advantage of those low rates and use your extra disposable income to pay them down," said Woitzik.

"(Because) if rates normalized and go up to five, six or seven percent, how can people afford the rates that they're currently paying?" he added.

With a report from CTV News' Peter Akman and files from The Canadian Press