Report: Rate cut hopes could impact homebuyers in 2025

As the Bank of Canada signals potential interest rate cuts, experts warn of a “psychological” impact on homebuyers in 2025. Despite falling mortgage rates and rising incomes improving housing affordability, the National Bank of Canada reports that the median household still needs to double its annual earnings to afford a typical home.

Royal LePage forecasts a 6% rise in home prices next year, with more affordable markets seeing the highest gains. However, industry leaders like Re/Max Canada’s Christopher Alexander caution that prospective buyers may delay purchasing, hoping for further rate reductions, creating a cycle of uncertainty.

The Bank’s moves could fuel competition and drive prices higher once inventory dwindles. Despite this, some analysts believe the mortgage landscape won’t shift drastically, as rate cuts are already priced into the market.