Bank of Canada rate cut aims to address housing affordability

The Bank of Canada has reduced its overnight rate to 3.25%, the fifth cut this year. This move is expected to improve housing affordability and boost homebuilding, though challenges remain in British Columbia.

Thomas Davidoff, an economics professor at the University of British Columbia, noted that while lower mortgage rates could ease monthly payments, rising home prices may offset these benefits. Raymond Wong, an affordable housing advocate, warns that the rate cuts, along with expanded mortgage eligibility, could increase demand and drive up prices.

For mortgage holders, lower rates will offer relief, particularly for those with variable rates. Homebuilders may also benefit from reduced borrowing costs, potentially spurring development. Despite these efforts, economists like Andrey Pavlov suggest that further economic reforms are needed to address the broader affordability issue.