What the recent interest rate cuts could mean for the fall market

If you’re considering purchasing a home for the first time in Canada, now is a particularly interesting time in the real estate market. This month, Canada cut rates to 4.25 per cent, and the U.S. was slated to lower rates on Sept. 18. This marks the first time in years that both countries are aligned on rate drops, which is likely to prompt a bigger discussion about the changing outlook for the market.

Why the fall might be a great time to buy

Historically, the real estate market tends to slow down during the summer, but the fall often brings a shift. With more rate cuts expected this year and a “comeback” in market activity, it is likely that we may see an uptick in both buyer interest and inventory levels.

The potential for lower interest rates means borrowing could become more affordable. For first-time buyers, this is a key advantage. With both fixed and variable rates expected to drop, borrowing costs could decrease, making homeownership a lot more accessible compared to the last little while. With the market also currently experiencing a period of lower competition and thus more inventory, this scenario gives first-time buyers the opportunity to take advantage of more choices and potentially lower prices. In fact, prices have been dropping for some homes that have lingered on the market, encouraging buyers to act more opportunistically.

What should buyers do next?

Get pre-approved
With rate cuts on the horizon, getting pre-approved for a mortgage can now position you well for the coming changes. Getting into the market is ideal, especially if prices drop further. However, if things get competitive, this could also drive prices up. Whether you’re buying for the first time or renewing your mortgage, talk to an unbiased mortgage advisor who can help you shop around.

Explore your options
Whether you’re considering a fixed or variable-rate mortgage, it’s essential to shop around for the right option. Lower rates could mean you might save a significant amount over the life of your mortgage.

Keep a close eye on the market
As media attention increases around the impending rate cuts and more buyers enter the market, competition may heat up. Acting now can help you avoid the potential rush and benefit from current lower prices and increased inventory.

Consider different property types
If you’re looking at condos, there is a substantial amount of inventory available. This could be a favourable time to explore condo options, which might offer better value and more choices compared to single-family homes. As prices have been dropping and could drop further.

The coming months could offer a unique window of opportunity for first-time buyers in Canada. With expected interest rate reductions and a potentially more dynamic market, now is a great time to assess your options and get pre-approved. Being proactive could help you secure a good deal and navigate a more competitive market landscape with confidence. Overall, doing the diligence to be prepared to buy is the best way to be opportunistic in a time when prices and interest rates are dropping.