Potential homebuyers in Alberta weigh interest rate drop amid economic uncertainty

The Bank of Canada cut interest rates in an effort to stimulate economic growth but the tariff threat remains a concern.

Canadian interest rates will drop again, which may entice more people to enter mortgages and loans, but the threat of tariffs creates uncertainty.

The Bank of Canada is cutting the borrowing cost by a quarter percentage point, to three per cent, a move that typically boosts housing market activity.

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“Under the $600,000 mark is still pretty tight, and I’m hoping some of those buyers that might have been pushed out because of the higher rates, because of the lower rates, they’ll have a bit more options,” said Corinne Lyall, owner of Royal LePage Benchmark.

However, the threat of US tariffs creates a lot of uncertainty.

“A lot of buyers I’m talking to, they’re like, ‘Just hang on and we’ll see what’s happening of what’s coming soon with the U.S.,’” said Jonathon Everden, a realtor with Justin Havre Realty.

Experts say the Bank of Canada decision should prompt the prime rate to fall to 5.2 per cent at most Canadian lenders and lead to lower variable mortgage rates.

“If you can take that variable rate and just kind of put yourself into a holding pattern for a few months, that might be quite advantageous to be able to lock in that fixed,” said mortgage expert Andy Hill.

This marks the sixth time in a row since June the Bank of Canada reduced rates. Its next move is less predictable until we learn more about what the U.S. plans to do about trade with Canada.

Eric Greenwood has been trying to sell his De Winton home for 200 days and hopes the upcoming drop in Canadian interest rates will help.

“Even though it’s not a lot and most people would say it’s not enough, at least it says we’re going in that direction,” said Greenwood.

Before deciding its next policy move on March 12, the central bank will have to consider what stimulus package the government may put forth to help Canadians if there is a trade war.

Experts say anyone who needs to renew their mortgage soon should shop around, as options may vary greatly from bank to bank.

“There’s more than a million Canadians who have to renew their mortgages this year, so this might help,” said Lyall.