September 2024 Mortgage Rate Drop: Impact on Ottawa’s Real Estate Market and Buyer Savings
The recent drop in mortgage interest rates has been a significant development for Canadian homeowners, particularly in Ottawa. The Bank of Canada recently cut its overnight lending rate by 25 basis points, marking the third consecutive cut, bringing the rate down to 4.25% from 4.5%. This reduction is expected to lower monthly payments for variable-rate mortgages. For instance, Ottawa homeowners could save around $286 per month on a home valued at $643,000, adding up to significant yearly savings.
This decrease in interest rates comes at a time when Ottawa’s real estate market is seeing a rise in inventory, with active residential listings up 25.8% compared to August 2023. However, despite this increase in listings, the market remains competitive, and the Ottawa Real Estate Board (OREB) expects the hot summer market to extend into the fall. The total dollar volume of home sales in August 2024 was $726.3 million, reflecting a 10.5% increase from the previous year.
This rate drop could encourage more buyers to enter the market, potentially driving up sales and prices, especially with the increased supply of homes available.
With the Bank of Canada’s recent mortgage rate cuts, condo buyers in Ottawa are poised to take advantage of lower monthly payments, making it a great time to enter the market. For example, savings could be as much as $286 per month on a $643,000 condo. This creates an opportunity for buyers to secure more affordable deals, especially with an influx of new listings on the market.
For condo sellers, the increase in market activity and the potential surge in buyer interest due to lower borrowing costs means this is a favorable time to list properties. With inventory up 25.8% compared to last year, sellers should act swiftly to capitalize on the current competitive edge before more buyers flood the market, driving up prices.