Canada’s housing market is showing signs of returning to normal after a tumultuous year, which is a welcome development for the mortgage industry. The COVID-19 pandemic caused home prices and sales activity to soar in major markets, followed by a sharp decline in 2022 due to aggressive rate hikes by the Bank of Canada to combat inflation. Despite still having some way to go, a market correction appears to be bottoming out in the spring, according to RBC’s assistant chief economist, Robert Hogue. While the central bank’s rate hikes initially surprised Canadians, they have adapted to the higher-rate environment, and borrowers are expressing little to no alarm about borrowing costs. With the Bank of Canada appearing to have reached the end of its rate-hiking trajectory and growing familiarity with higher rates, the spring market could be robust. The real estate agents that do a lot of business with realtors are already busy, indicating a positive sign for a spring market, but it remains to be seen how quickly the pace picks up.
Despite the central bank’s rapid rate hikes, Canadians have largely adapted to the higher-rate environment, according to Dwight Trafford, Principal Broker at The Mortgage Centre in Orangeville, Ontario. He says that clients are expressing little to no alarm about the prospect of higher borrowing costs, as the rates are still low historically. The familiarity with higher rates, along with the Bank of Canada appearing to have reached the end of its rate-hiking trajectory, may signal a robust spring market. The positive signs are there that there will be a spring market, although it remains to be seen how quickly the pace will pick up. Mortgage brokers who do a lot of business with realtors are already seeing a surge in activity.