Similarly, consumers’ expectations for interest rates remain higher than they have been historically and have not changed much from a quarter ago. In follow-up interviews (conducted before the Bank of Canada reduced the policy interest rate on June 5), consumers expressed uncertainty and concern about the timing of potential rate cuts. One respondent said, “[The media] talked a lot about occasions where there would be a decrease in rates, but according to the trend, it will take some time.” Another said, “I don’t know why the Bank of Canada is being that cautious; it’s already been six months that theoretically they could have started to lower interest rates.”
Although mortgage holders continue to expect interest rates to remain elevated, most are still confident they will be able to cope with higher payments when they renew their mortgage. Those closer to renewal appear to be slightly more concerned than those renewing later. Overall, the probability of mortgage holders missing a debt payment remains low and unchanged since 2021.
Interest rate expectations are still high, but housing market activity continues to be relatively strong. Indicators of housing churn are at or above their 10-year survey averages (Chart 9). The share of consumers planning to buy a home is close to the survey average and higher than the average of the previous four quarters. This higher level of homebuying intentions continues to be supported by newcomers, who typically exhibit stronger intentions than other Canadians. When consumers were asked which factors are driving their intentions to buy a home, they most commonly cited:
- a perception of improving home affordability
- rising rent prices, making mortgage payments more attractive
- personal reasons
In addition, home price growth expectations increased for the second quarter in a row and remain above average at roughly 5%.
