As Justin Trudeau prepares to take up residence at 24 Sussex Drive, real estate agents continue to debate what the Liberal majority government means for the housing market, including interest rates and access to the market.
For Andrew Mitchell, a chartered real estate broker with Vistacor Realty Group in Montreal, it’s Trudeau’s promise to modernize the Home Buyers’ Plan that could be a real game changer.
“The plan to allow not just first-time buyers but those going through divorce, the death of a spouse or other life-changing events easier access to their RRSPs for down payments, will open up home ownership to those who otherwise would not have the down payment to qualify for a mortgage,” he told REP.
While some have speculated that the new government’s plans to invest billions in infrastructure may cause interest rates to climb, Paul D’Abruzzo, an investor and real estate agent in Toronto doesn’t see it happening anytime soon.
“We are betting on low interest rates for two years or longer meaning the real estate market will continue to appreciate,” he told REP. “With cheap money available buyers will be looking for a place to invest their money in hard assets and good properties will be in high demand.”
Investor Kathy Berner, owner of Regency Management & Real Estate in Regina, takes a contrarian view.
“Due to the higher spending, we should expect higher bond yields and less need to cut the prime lending rate to stimulate spending,” she told REP. “These two factors will lead to higher fixed interest rates on mortgage lending. I wouldn’t expect a huge increase but an increase nonetheless.”
Another impact could be bringing in new homebuyers to the market, via the plan to reduce the tax burden on the middle class, says Mitchell.
“My feeling is that while this may not do much in higher priced markets, it could offset a small amount of the increasing costs to borrow as interest rates gradually start to rise,” he says. “Their spending on infrastructure projects will create new jobs and when we buyers have good paying jobs the real estate market stands to benefit.”