Bank of Canada interest rate pause could force landlords to sell properties: experts
The Bank of Canada’s decision to hold interest rates steady on Wednesday could put financial pressure on landlords and leave renters vulnerable, experts say.
The second rate hold from the BoC is likely to weigh on some landlords who hold variable rate mortgages on their investment properties and could trigger them to sell their units, according to realtors. This scenario would impact tenants as they face the risk of being displaced into a sky-high rental market, they said.
- From BNN Bloomberg: Full impact of past Bank of Canada interest rate hikes not yet seen: expert
- The Offer newsletter: Sign up for curated coverage of Canadian real estate
"For every month we have a rate pause, there will be landlords who will struggle to hold onto their rental properties,” Davelle Morrison, broker at Bosley Real Estate, told BNN Bloomberg in an interview on Wednesday.
She noted that those investment property owners who are currently operating at a loss will likely be forced to sell, or, increase the price of rent to keep up with costs. In either scenario, the renter gets squeezed, she added.
"Most landlords have to start charging more in rent just to keep up with heightened costs that come with interest rate hikes — which of course have a trickle down effect into the rental market at large,” Morrison added.
Another housing expert is echoing her sentiment.
Owners who are selling their properties due to financial stress have increased 300 per cent year-over-year in Toronto, Daniel Foch, broker at RARE Real Estate, told BNN Bloomberg in an interview on Wednesday.
“It’s time that’s killing landlords financially. The freeze in interest rates means they are forced to carry higher costs for prolonged periods of time,” he said.
Renters are at the mercy of their landlords should they be forced to sell, he added. This leaves the average tenant at a disadvantage and creates a supply of units that will ultimately cost more to rent, he said.
“This kind of pressure could likely drive some renters who have been on the sidelines for quite some time to enter the buyer market,” he said.
YOUR FINANCES
opinion | Should you take advantage of the First Home Savings Account?
Personal finance contributor Christopher Liew explains how First Home Savings Accounts work, who’s eligible for the program, and outlines the contribution rules.
opinion | Find out how much contribution room is left in your RESP to avoid penalties
Opening a Registered Education Savings Plan (RESP) is a great way to fund your child’s future education. Personal finance contributor Christopher Liew outlines the contribution rules for RESPs and explains how to find out how much contribution room you have left so that you can avoid penalties.
opinion | Is it a good time to buy a new vehicle?
If you're like many would-be vehicle shoppers, you may be wondering when prices will finally drop. The good news is that the vehicle market seems to be finally stabilizing, says personal finance contributor Christopher Liew.
opinion | How to get the most out of your grocery rebate
Personal finance contributor Christoper Liew shares the latest information about who’s eligible for the grocery rebate, when they can expect their payments, and some helpful tips on making the most of your grocery rebate.
opinion | Dos and don'ts of money while travelling
As a former financial advisor, I’ve always been fascinated by how the 'culture' around money differs from one region of the world to another,' writes personal finance commentator Christopher Liew. 'Today, I’ll outline some of the interesting money habits that I’ve noticed while travelling the globe, starting with some of our own!'
opinion | How much of a raise should you ask for in a time of high inflation?
With the rising cost of food and living expenses, you might be considering asking for a raise. On CTVNews.ca, personal finance contributer Christopher Liew explains how inflation could determine the extent of your raise, as well as other key factors.
opinion | Top sources of passive income for Canadians looking to earn more
On CTVNews.ca, personal finance contributor Christopher Liew explores some of the top sources of passive income in Canada, for those looking to increase their earnings.
Owe money to the CRA? Here are some repayment options
Getting an income tax refund can be a happy bonus for your household budget, but an unexpected tax bill can be an unpleasant surprise, especially if you don't have the cash on hand to pay it.