One economist says lack of affordability is keeping the housing market cool, citing a further need for more interest rate hikes from Canada’s central bank.
“We’re expecting a couple more cuts this year and four rate cuts (of) over 25 basis points next year,” said Robert Hogue, assistant chief economist at Royal Bank of Canada, during an interview with BNN Bloomberg on Friday.
On Wednesday, the Bank of Canada cut interest rates by 25 basis points, bringing its key policy rate to 4.5 per cent in a move widely expected by economists in a Bloomberg survey. The move follows a previous 25 basis point interest rate cut in June.
Going into next year, Hogue predicts approximately 200 basis points worth of interest rate cuts from the Bank of Canada.
“In time, it will stimulate the demand for home ownership. But that will be more of a gradual process in our view,” he explained.
According to Hogue, several rate cuts will be needed to get potential buyers off the sidelines adding that affordability remains a primary issue.
To watch the rest of Hogue’s interview with BNN Bloomberg, click the video above.
