BURST
Surrey Realtor Steve Karrasch rarely hears complaints about interest rates from buyers sitting on the sidelines of Metro Vancouver’s housing market.
“They’re not holding off, waiting for interest rates to come down,” he said.
More often, they’re watching house prices.
Karrasch, a Realtor with Macdonald Realty, believes the quarter-point interest rate cut announced Wednesday won’t directly bring prices down, but the economic instability that the Bank of Canada is responding to could eventually lead to decreases.
That might be good news for first-time buyers, he said, although it’s unlikely to influence the larger factors contributing to the current sales slump. Most buyers are also sellers at the moment, and if they can’t get the price they deem fair, they can’t go on to buy the next place.
“We’re really stuck at the moment,” he said. “To make a difference, the economy has to turn around.”
Karrasch’s reaction was typical of the measured tone being taken in response to Wednesday’s rate cut, which economists largely expected. The Bank of Canada cut its policy rate by 25 basis points to 2 1/2 per cent, citing a weaker Canadian economy and “less upside risk to inflation” for the decision.
Bank of Canada Gov. Tiff Macklem said the effect of U.S. tariffs as well as slow population growth and a weak labour market are weighing on the economy.
The rate cut, while positive, will do little in the face of those economic realities, said Michael Geller, a Vancouver planning consultant and property developer .
Those with the most to gain from the drop are homeowners whose mortgages are up for renewal, he said: “No doubt, this helps them.”
Lower interest rates also help buyers, but with the perception that there will be more drops to come, it doesn’t create any urgency, particularly as prices remain formidable.
Geller also believes softening prices may eventually be the result of economic uncertainty. That could help first-time buyers, who might also benefit from a number of new developments nearing completion. Some of the investors who bought during the presale process three or four years ago may not be able to complete the sale as the units are worth less than the purchase price.
Geller predicted a glut of studios and one-bedroom apartments at a time when decreasing immigration is also expected to impact housing demand.
“It could be good news for those in the market and bad news for developers,” he said.
Penelope Graham, a mortgage expert at Ratehub.ca , agreed that lower interest rates will likely “draw more prospective homebuyers out of the woodwork.”
According to Ratehub.ca’s mortgage payment calculator, a typical homeowner with a variable mortgage could pay about $117 less per month, or $1,404 less per year, on their mortgage payments. The calculation is based on a homeowner who put a 10 per cent down payment on a $943,031 home with a five-year variable rate of 3.95 per cent amortized over 25 years.
With a 25-basis-point rate decrease, their variable mortgage rate will decrease to 3.7 per cent and their monthly payment will decrease to $4,462 from $4,579.
In a statement, the Canadian Mortgage Brokers Association of B.C. said about one-third of B.C. homeowners are in a variable rate mortgage in the prime lending market.
“The rate cut has provided some much-needed breathing room for British Columbians. What is needed now is action from all levels of government to help alleviate the intense pressure on the housing market that’s keeping Canadians locked out,” said Rebecca Casey, president of CMBABC.
But Neil Moody, CEO of the Canadian Home Builders Association B.C. , said more work needs to be done to stabilize the development industry.
While “good news,” interest rate cuts are “not a remedy to the challenges facing residential construction, which has seen projects cancelled and homebuilding activity slow down due to increasing costs that make it hard for builders to bring projects to the market that homebuyers can afford,” he said.
Economic factors have created a challenging market environment for residential projects to proceed. Some of B.C.’s largest development and real estate companies, including Wesgroup and Rennie, have recently laid off staff.
In the meantime, home sales continue to be weak. Greater Vancouver Realtors reported that residential sales in the region totalled 1,959 in August 2025, a 2.9 per cent increase from the 1,904 sales recorded in August 2024, but still 19.2 per cent below the 10-year average.
Fraser Valley home sales fell more than 20 per cent in August, according to the Fraser Valley Real Estate Board, which recorded 931 sales in August, down 22 per cent from July and down 13 per cent year-over-year. August sales were 36 per cent below the 10-year average.