Prospective buyers are likely to take confidence from the chance of lower rates at some point in 2024, Porter said – but they shouldn’t expect a rapid decline in rates after the first cut.
“I think if you’re looking to get into the market, you would be somewhat encouraged by the talk that rates are likely to come down slowly, gradually,” he said. “But you might not be thrilled about the caution that the central bank governor has indicated around that view, that this is going to take some time and rates are not going to come down as fast as they went up.
“I like to say rates took the elevator up; they’re going to take the staircase down. This is going to be a pretty slow walk down the mountain, I think.”
If economic trends continue to play out as expected, Porter said BMO expects the Bank of Canada to trim rates to 4% by the end of this year and 3% by the end of 2025 – although that’s by no means a surefire thing in light of the central bank’s continuing cautious outlook.
“I think if we’re going to be off, it’s that rates are a little bit higher than what we’re projecting at the end of both years,” he said. “In other words, this whole backing down in rates might take a little bit longer.”
