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Vancouver Sun
14-05-2025
- Business
- Vancouver Sun
Mortgage rates at 3% or lower the magic number to reignite Canada's housing market
Mortgage rates need to drop to three per cent to get Canada's housing market and homebuyers fired up again , say some industry watchers. The lowest rate for a five-year fixed-rate mortgage , preferred by many Canadian buyers and homeowners , is currently 3.74 per cent, according to an aggregating site operated by Financial Post columnist Robert McLister. 'One of the reasons that we were never really expecting a big rebound in housing into the spring was because that level of borrowing cost isn't low enough to trigger a lot of activity,' Robert Kavcic, a senior economist at BMO Capital Markets, said. Start your day with a roundup of B.C.-focused news and opinion. By signing up you consent to receive the above newsletter from Postmedia Network Inc. A welcome email is on its way. If you don't see it, please check your junk folder. The next issue of Sunrise will soon be in your inbox. Please try again Interested in more newsletters? Browse here. That conclusion was borne out by a recent Bank of Montreal survey that said 68 per cent of prospective homebuyers indicated current borrowing rates remain a stumbling block for people wanting to purchase a home. Nearly 40 per cent said rates needed to fall to three per cent or lower before they would purchase or refinance a home. 'Three per cent mortgage rates is a level that would actually make sense … from an affordability perspective, even from an investment perspective, but at four per cent borrowing costs, things are still very stretched and don't make a whole lot of sense for a lot of people,' Kavcic said. Andy Hill, a mortgage broker and the cofounder of a mortgage aggregator site, said that a mortgage rate at three per cent or lower is the magic number for some people. 'The real estate market will ignite, we will start to see a lot more transactions, when we have three per cent,' he said. 'We're slowly getting there, but the volatility recently (of tariffs) has added uncertainty to the mix.' Hill said past expectations and the feeling of homebuyers that they want to live more frugally have caused them to react negatively to rates of four per cent and up. Plus, wannabe homeowners don't have a lot of wiggle room when it comes to what they are comfortable paying, he said. For example, 67 per cent of Canadians said the most they were comfortable paying for housing was $1,749 each month, according to a survey by at the end of last year. Furthermore, 42 per cent of respondents who earned at least $100,000 a year said they couldn't afford mortgage payments that were higher than the average amount. Canada Mortgage and Housing Corp. said that the average monthly mortgage payment is $1,829. That means many people's options are limited in the current housing climate, where the average price in Canada was $678,331, according to the Canadian Real Estate Association . Hill said the average total mortgage most Canadians are comfortable carrying is in the range of $350,000, typically over 25 years, though a 30-year amortization, which helps reduce monthly payments, comes out to roughly $1,780 a month at current borrowing rates. But that payment won't fly with many, depending on what part of the country a person is looking to buy in, he said. The average starter home costs $351,000 in Canada, but it costs $800,000-plus in Vancouver. 'A mortgage payment with a regular down payment for a first-time homebuyer of less than 20 per cent down means they're looking at a crazy difference in terms of what they feel comfortable paying every month (and the reality),' Hill said. • Email: gmvsuhanic@ Bookmark our website and support our journalism: Don't miss the business news you need to know — add to your bookmarks and sign up for our newsletters here .
Calgary Herald
08-05-2025
- Business
- Calgary Herald
Mortgage rates at 3% or lower the magic number to reignite Canada's housing market
Article content Mortgage rates need to drop to three per cent to get Canada's housing market and homebuyers fired up again, say some industry watchers. Article content The lowest rate for a five-year fixed-rate mortgage, preferred by many Canadian buyers and homeowners, is currently 3.74 per cent, according to an aggregating site operated by Financial Post columnist Robert McLister. Article content Article content Nearly 40 per cent said rates needed to fall to three per cent or lower before they would purchase or refinance a home. Article content 'Three per cent mortgage rates is a level that would actually make sense … from an affordability perspective, even from an investment perspective, but at four per cent borrowing costs, things are still very stretched and don't make a whole lot of sense for a lot of people,' Kavcic said. Article content Andy Hill, a mortgage broker and the cofounder of a mortgage aggregator site, said that a mortgage rate at three per cent or lower is the magic number for some people. Article content Article content 'The real estate market will ignite, we will start to see a lot more transactions, when we have three per cent,' he said. 'We're slowly getting there, but the volatility recently (of tariffs) has added uncertainty to the mix.' Article content Article content Hill said past expectations and the feeling of homebuyers that they want to live more frugally have caused them to react negatively to rates of four per cent and up. Article content For example, 67 per cent of Canadians said the most they were comfortable paying for housing was $1,749 each month, according to a survey by at the end of last year. Furthermore, 42 per cent of respondents who earned at least $100,000 a year said they couldn't afford mortgage payments that were higher than the average amount.
