Lower lending rates and balanced market create ‘rare’ window of opportunity for Metro Vancouver buyers: real estate experts

The Bank of Canada has cut its key lending rate by 25 basis points, bringing it to three per cent.

The Bank of Canada has slashed the interest rate by 25 basis points, bringing it to three per cent.

The cut means the prime lending rate is also going down, which is welcome news for variable rate mortgage holders.

Real estate experts argue now is a rare opportunity for buyers in Metro Vancouver as the market is currently balanced and borrowing rates are declining.

Mortgage broker Marci Deane says it’s been a wild ride, but interest rates are finally returning to what they were back in 2022.

“People’s budgets are tight because it hasn’t just been mortgage interest rates that have changed, right? We’ve had a lot of other things in our day-to-day life becoming more expensive with inflation,” said Deane.

The Canada Mortgage and Housing Corporation says 1.2 million mortgage holders are up for renewal in 2025 and they will need to decide whether they will go with a fixed or variable policy.

“About 85 per cent of that number, they locked in when the rates were less than one per cent,” said Kevin Hughes, deputy chief economist of CMHC.

Deane calls it the “renewal cliff.”

“Some of those people, they’ll remember, might have fixed in at some point along the way. So if they had a renewal in 2025 but they were in a variable, maybe last year or the year before they locked in and extended out,” said Deane.

She says the prime lending rate will now be at 5.2 per cent.

“That means people with a good discount from prime on their variable rate mortgage will be down to 4.2 which is quite similar to what a fixed rate mortgage would be today,” explained Deane.

Variable rate mortgage holders were pushed to their limits in 2022, after the Bank of Canada raised interest rates 10 times in just over a year in an effort to cool inflation.

“There’s probably a lot of people that have had variables for the last few years that have PTSD and don’t ever want to do that again. I would say in my office it’s maybe 50/50,” said Deane.

Now, tariff threats from the U.S. have created new uncertainty.

“So are we heading into a recession due to tariff conflicts? Will that mean for the rate cuts from the Bank of Canada? If that’s the prediction, then maybe there’s an argument to go variable and ride this down,” said Deane.

However, she says if stressing about your rate is keeping you up at night, a fixed rate is likely best for your mental health.

Deane also adds that life changes rapidly and there is never a perfect time to make the decision.

“You need a place to live, and you have to keep moving on, and we’re always going to have something that will come along and change the trajectory, change the plan. So no, I don’t think you should wait. You should just get on with it,” Deane told CTV News.

When choosing between variable and fixed it’s important to consider your plans for moving or selling.

“You’ve got to be really careful about certain penalties that might come with a fixed rate mortgage. So it’s a broader conversation than just the rate. It’s also future plans for the homeowner,” said Deane.

Real estate experts say now is a rare window of opportunity for buyers.

The market is balanced for the first time in about a decade and wages have been growing faster than home prices.

“Homes are still obviously very expensive, but most people, particularly for first time home buyers purchase homes based on monthly carrying costs, called rent equivalency, not the sticker price on a home. So the homes are getting more affordable every six weeks as the bank decreases the cost of borrowing,” said Phil Soper, president and CEO of Royal LePage Real Estate.

He says there’s plenty of inventory out there and buyers shouldn’t feel pressured.

“You’re going to have some time this end of winter and into spring to look around,” said Soper.

He says sellers need to listen closely to advice from their Realtors.

“Price to market. The home prices are easing up, but we are far gone from the 2021 situation during the pandemic, when you could throw any price on a home and hope it to sell,” said Soper.

Soper says he expects home prices in Toronto will soon eclipse those in Vancouver for the first time in decades.

Metro Vancouver home prices are expected to rise about five per cent this year.