Are rising mortgage rates impacting Canada's real estate market? New survey reveals shocking findings



Discover the impact of rising mortgage rates on Canada's real estate market. New survey reveals shocking findings, highlighting the negative effects of increasing interest rates on housing market sentiment.

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Ahead of the Bank of Canada's pending rate decision, a Zoocasa survey reveals that an increase in mortgage rates is likely to dampen real estate sentiment. The survey, released on Monday, indicates that 79.1% of respondents believe that a rise in interest rates, closely linked to mortgage rates, would negatively impact their interest in the housing market. This figure is notably higher than the 71.3% recorded in a previous Zoocasa survey conducted in the spring. Zoocasa suggests that these findings reflect a deterioration in both affordability and real estate market sentiment over the past few months.


Are rising mortgage rates impacting Canada's real estate market? New survey reveals shocking findings | ogusyis

Of particular concern is the impact on first-time buyers, as the survey shows that 86.3% of this group believe that further increases in mortgage rates would have a negative effect on their interest in real estate. Uncertain economic conditions appear to be a key factor influencing this sentiment among first-time homebuyers. 

These survey results come just days before the Bank of Canada announces its interest rate decision. It is widely anticipated that the central bank will maintain its policy rate at the current level of five percent. This expectation aligns with the perspective of a majority of economists. Since March 2022, the Bank of Canada has gradually raised interest rates from a historic low of 0.25 percent to the current level of five percent.

It is worth noting that the Zoocasa survey was conducted following the central bank's decision to keep interest rates unchanged at five percent last month. In response to this decision, 23.3% of respondents stated that it had a positive impact on the real estate market. However, a significant portion of respondents (16.1%) strongly disagreed with this viewpoint, while 38.8% expressed a neutral response.

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Another notable finding from the survey is that 38.9% of respondents strongly disagree that the Canadian government is doing enough to address housing shortages. This sentiment suggests a significant dissatisfaction among the public regarding government policies related to housing. Only 12.2% of respondents agreed that the government is taking sufficient measures to tackle housing affordability. The survey highlights the growing demand for housing, particularly in light of the government's plan to welcome 485,000 newcomers in 2024 and 500,000 in 2025. Without adequate efforts to boost housing supply, inventory challenges are likely to persist, warns the survey.

In conclusion, the Zoocasa survey reveals a prevailing concern among Canadians regarding the potential impact of rising mortgage rates on real estate sentiment. The findings indicate that both affordability and overall market sentiment have worsened over recent months. Specifically, first-time buyers seem particularly vulnerable to the effects of increasing mortgage rates. These survey results serve as an important reference for policymakers and institutions responsible for addressing housing shortages and affordability.

Are rising mortgage rates impacting Canada\'s real estate market? New survey reveals shocking findings

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