Forecasts: A fall in the key interest rate and its potential repercussions on the Quebec real estate market

The possibility of a rate cut in Quebec could potentially have a significant impact on the real estate market. A reduction in the key rate would probably lead to lower mortgage rates, which could stimulate demand for property purchases. However, this could also lead to an increase in property prices, making home ownership more difficult […] 

The possibility of a rate cut in Quebec could potentially have a significant impact on the real estate market. A reduction in the key rate would probably lead to lower mortgage rates, which could stimulate demand for property purchases. However, this could also lead to an increase in property prices, making home ownership more difficult for some buyers. In addition, a cut in the policy rate could encourage investment in real estate, which could stimulate the construction of new properties and potentially create a glut of supply on the market. It is therefore essential to keep a close eye on the evolution of key rates, and to anticipate the repercussions they could have on the Quebec real estate market.

A 0.25% cut in the key interest rate could have several repercussions on the Quebec real estate market. Firstly, this could lead to lower mortgage rates, which could make buying a home more attractive to buyers, thus stimulating demand. However, such a drop could also contribute to an increase in property prices, as lower borrowing rates can encourage buyers to pay more for a property. What’s more, a lower policy rate could encourage investors to turn to real estate as a more attractive investment compared to other fixed-return investments. Ultimately, the net effect will depend on various factors, including local supply and demand, as well as other economic conditions.

Here’s a historical overview of the Bank of Canada’s key rates, which influence interest rates in Quebec and Canada as a whole:

• Until 2015: Key interest rates were kept at historically low levels to stimulate the economy after the 2008 financial crisis.
• 2015 – 2018 : The Bank of Canada began gradually raising key rates to counter inflationary pressures and normalize monetary policy.
• Late 2018 – early 2020: Key rates were kept stable or raised slightly.
• March 2020: In response to the COVID-19 pandemic, the Bank of Canada rapidly reduced key rates twice to support the economy.
• Since 2020: Key interest rates have been maintained at historically low levels to support economic recovery and combat the effects of the pandemic.

These movements in key rates have influenced mortgage rates in Quebec and across Canada, with repercussions for the real estate market.