A rate cut may boost sentiment, but financial readiness remains key for homebuyers
The Bank of Canada’s recent rate cut has Canadians wondering if it’s a good time to buy a home. But while headlines tout lower borrowing costs, industry experts are urging buyers to look beyond the hype and focus on their financial fundamentals.
“The recent rate cut won’t put a lot of extra money back in the pockets of variable-rate borrowers,” said Leah Zlatkin, licensed mortgage broker and LowestRates.ca expert.
“But psychology plays a big role in real estate. When people hear rates are moving down, they often assume housing suddenly becomes much more affordable. That shift in perception alone can spark more activity, even if the actual financial change is relatively small.”
Zlatkin emphasized that for well-qualified buyers, the current environment could present opportunities, but only for those with stable incomes and sufficient savings. “If you’re financially prepared, this could be your chance to secure the right property at the right price,” she said.
A TransUnion study found that 27% of Canadians can’t pay all their bills and loans in full. Most are worried about inflation, and over half are concerned about a possible recession.
The latest MNP Consumer Debt Index also showed that nearly two-thirds of Canadians need interest rates to drop to feel better about their finances, while 36% feel stressed or anxious about money.
Market sentiment and buyer leverage
While the rate cut has generated optimism, Zlatkin cautioned that a 25-basis-point reduction does not dramatically alter affordability.
“Buyers should not view it as a signal to rush in,” she said. Instead, she recommended a holistic approach. “The focus should be on the full financial picture, including down payment readiness, monthly carrying costs, and long-term stability, before making a purchase.”
Elevated inventory levels in many regions mean that buyers may have more leverage than they realize.
“Even with renewed interest in the market, inventory remains elevated in many regions. This gives qualified buyers opportunities to secure better terms, such as price, inspection outcomes, or closing flexibility, which may not be as accessible once demand strengthens,” Zlatkin said.
Expert guidance and long-term thinking
Navigating today’s market requires more than just watching rate movements. “A skilled realtor and mortgage broker can help buyers cut through the noise,” Zlatkin said.
“Realtors understand neighbourhood trends, pricing dynamics, and seller motivations, while brokers ensure borrowers secure the most competitive rate and terms. This professional support can prevent costly mistakes, especially for first-time buyers navigating a complicated market.”
Zlatkin also stressed the importance of a long-term perspective. “Homeownership works best when approached as a long-term strategy. Buyers who plan to hold a property for five or more years will have time to ride out short-term market fluctuations,” she said.
While some buyers are waiting, others, ready to move, are finding good deals in today’s cooler market.
“I have first-time homebuyers that have been on my books for years – and a bunch of them bought houses in July and August this year, mostly because there are townhomes and row homes, specifically centre row homes, that are priced very reasonably for what people could afford,” she previously told Canadian Mortgage Professional.
“And a lot of these people have been sitting on the sidelines for so long, they’ve built up a little bit of a downpayment. And now that houses are finally within that range, it’s their time to jump aboard and get into the market. So I think it’s a great news story for first-time homebuyers.”
