Rate cut won’t impact affordability, Canadians say in survey

Article Content

A large majority of Canadians do not expect housing affordability to improve or home sales to increase as a result of the Bank of Canada’s interest rate cut in June, a new poll from market research firm Abacus Data shows.

The survey results showed that 73% of Canadians do not expect the interest rate cut to have a significant impact on the affordability of homes and other major purchases. Similarly, 72% of respondents believe the cut will have little impact on the housing market overall.

Article Content

“The Bank of Canada’s recent interest rate cut has left Canadians cautiously skeptical about its impact on housing market affordability and activity,” Abacus Data said in its report.

The poll was conducted June 6-13 among 1,550 Canadian adults following the 0.25 per cent interest rate cut on June 5.

The statement comes after reports that home sales across the country have not seen a rise following the downgrade.

Overall, only 35% of Canadians expect interest rate cuts to impact housing market activity, while 46% expect no change in home sales.

The survey found that 80 per cent of Canadians do not believe lowering interest rates will have an impact on affordability, a sentiment that is particularly strong among older Canadians aged 60 and over.

Meanwhile, 61% expect no change in the number of homes sold, while 33% are optimistic that lower interest rates will spur more sales.

The study found that only 10% of Canadians plan to accelerate their home buying process as a result of the interest rate cuts, while 21% plan to wait for further cuts. Some 69% say the rate cuts have had no impact on their timeline for buying.

Article Content

As for homeowners, 11% of them rushed to sell their homes in response to the price reduction, while 12% of them plan to postpone the sale until further reductions occur. However, the majority of them (76%) indicate that the price reduction did not affect their decision about when to sell.

The results underscore consumers’ cautious view of the impact of interest rate cuts on buying and selling decisions, the report said.

“When Canadians look at the Bank of Canada’s recent interest rate cut, many are playing it safe,” the report said. “They are not convinced that the cut will make home purchases cheaper or make a big difference in the housing market.”

The poll’s margin of error is +/- 2.53 percent, 19 times out of 20.

• e-mail: dpaglinawan@postmedia.com

Add our site to your bookmarks and support our journalism: Don’t miss the business news you need to know – add financialpost.com to your bookmarks and subscribe to our newsletters here.

Share this article on your social network