Don't wait for the 'perfect market' when buying a home: expert

CTV National News: Canada’s inflation rate lowers Canada’s inflation rate dropped to 2.5 per cent in July - the slowest pace in more than three years. Annie Bergeron-Oliver reports.

The Bank of Canada lowered its key interest rate by 25 basis points Wednesday, announcing the first cut in more than four years and providing a glimpse of hope to mortgage holders.

Bank governor Tiff Macklem said in a prepared statement that it's reasonable to expect more rate cuts, but warned it's far from a guarantee.

Since the benchmark rate tends to influence mortgage rates, should prospective homebuyers plan their next move based on Wednesday's announcement?

One banker says that could be a mistake.

"There is more that you can do than wait for the Bank of Canada to solve your problems," Mike Schilling, CEO and president of Community Savings Credit Union, told CTV News Channel on Wednesday.

Schilling said it's true the central bank's move could spell lower mortgage rates for the 2.2 million Canadians approaching renewal in 2024 and 2025. The benchmark rate had held at five per cent since last July.

"If you're on a variable rate mortgage, I think you will see your rate come down quite quickly. I think the banks and credit unions and other lenders will react to this," he said, adding that borrowers with fixed rates should also feel the difference when it comes time to renew.

But for anyone waiting for the perfect moment — or another rate drop — to get into the housing market, Schilling offers a piece of advice he says has worked for him.

"There's an old saying that the only good time to buy property is 20 years ago, or today," he said. "And I generally stick with that myself."

Rather than wait to see what the central bank does next, he says prospective homebuyers are better off shopping around for a mortgage, seeking out good advice, paying attention to terms and looking at insured rates.

Schilling says buying a home is a deeply personal decision influenced by a multitude of factors, including borrowers' finances, flexibility and age or stage of life.

"You need to think about what happens if the cost of that (home) goes up. How stable is your income? If you had to move homes, how easy or difficult would that be?" he said.

"People fall into the trap of thinking of this solely as an investment, but it's the place we live … and there are real human factors that need to be taken into account."

Schilling cautions there are other factors that influence home prices, from one localized market to the next. These can include local population increases and housing supply shortages, both of which can drive up the cost of housing, independent of the benchmark rate.

"There are many other factors than interest rates, which is why it's all about getting the right advice when you make this important decision."