Over the past two years, the rising cost of borrowing has led many Canadians to rethink or adjust their home buying plans. This shift came into effect after the Bank of Canada initiated hikes in its key interest rate starting March 2022. A survey by Royal LePage, executed by Leger, reveals that 27% of the adult population in Canada has been active in the housing market during this period, with 56% of these individuals delaying their property search due to increasing interest rates.

As inflation rates have started to decrease, nearing the 2% target over the last year, predictions are that the Bank of Canada might reduce the overnight lending rate later this year. This anticipated cut could provide relief for those with variable-rate mortgages and for prospective buyers who’ve had to pause their plans. Of the people who’ve postponed their home purchases, 51% are considering resuming their search if interest rates decrease — with 10% motivated by a 25-basis-point reduction, 18% looking for a drop of 50 to 100 basis points, and 23% waiting for a decrease of over 100 basis points.

Phil Soper, the CEO of Royal LePage, observed that market activity surged immediately after the Bank of Canada’s initial decision not to increase rates last March, boosting consumer confidence. He anticipates a similar uptick in buyer demand once there are clear signs of impending rate cuts. Soper emphasizes the importance of buyer confidence in the market’s stability, suggesting that a pivotal moment could arrive this spring.

20% of those who have put their home buying on hold now say they’ve scrapped the idea entirely, while 12% are ready to dive back in if the Bank of Canada’s key rate stays the same.

For those eyeing a return to the market upon rate reductions, 44% prefer securing a mortgage with a four or five-year fixed rate — the most favored option in Canada. This figure is notably twice the number of individuals opting for variable-rate mortgages (22%), with another 12% considering short-term fixed-rate mortgages.