09/21/2026
Canada: Rate Cuts Can Worsen Affordability
There’s a common belief that lower interest rates automatically make homes more affordable, but research from Canada’s central bank paints a more complex picture. When rates drop, we often see a quick surge in housing demand—resales start picking up soon after, with the biggest impact showing up 18 to 24 months later. But new housing supply doesn’t keep pace: builders typically take about two years to ramp up, especially with all the planning and permits needed for multi-unit projects. Strong job markets can make this effect even stronger, since buyers feel more confident and lending conditions get easier. The reality is, while rate cuts might eventually lead to more homes being built, the gap between surging demand and slow-arriving supply can actually make affordability worse in the short term. For those navigating the GTA market, understanding how these forces interact is key to making informed decisions—my goal is always to keep you clearly informed so you feel comfortable with your next steps.