The Bank of Canada's July 2024 Rate Cut and What Came Next for the GTA

On July 24, 2024 the Bank of Canada cut its policy rate by 0.25% to 4.5%, its second consecutive cut that year. The immediate effect was psychological. Variable-rate holders paid less, renewals got cheaper, and buyers who had been waiting saw a second signal that the direction had changed. I expected a slightly busier fall market, not a price jump.

I am Moe Asgarian, a Broker with RE/MAX in Toronto, ranked 47th worldwide inside the company, and for several months before this I had been saying a cut was likely by the summer of 2024 or at the latest by the fall. Here is what the July 24, 2024 decision actually said, and what I saw it doing in the Toronto and GTA market.

What the Bank of Canada Announced on July 24, 2024

On the morning of July 24, 2024 the Bank of Canada lowered its benchmark rate by 0.25%, taking it to 4.5%. That was the second cut in a row in the same year. In its statement the Bank said the Canadian economy was growing but was still below its long-run potential, and that this weak position was showing up in day to day costs, in housing and in the labour market. It also noted that excess supply in several parts of the economy was weighing on inflation, and that it expected growth to continue through the rest of 2024 and into the following year. Growing is not the same as healthy, and that gap is exactly why the Bank was cutting.

Who Felt the July 2024 Cut First

Two groups felt it right away. Anyone coming up to a mortgage renewal after July 24, 2024 could renew at a lower rate than they would have a few months earlier, and every further cut would help them more. Anyone already carrying a variable rate saw their monthly payment come down. That is real money at a time when the cost of living was high and several years of elevated rates had worked their way deep into household budgets.

The Bigger Effect Was on Confidence in the GTA

The main reason people were staying out of the market was fear of high interest rates. You buy a home and the monthly payment is several times what it was in earlier years. After July 24, 2024 that picture started to shift. A lot of buyers had been waiting for a signal that the economy was heading back in the right direction, and this was the second such signal in a row, which gives people the confidence to come back and invest. My read at the time was modest movement in parts of the market, with the fall of 2024 picking up as buyers returned.

Something else worth saying about that stretch of 2024: good homes had come to market. Buyers had options in front of them that were not there the year before, which is a better reason to act than a rate headline.

Fixed Rates, Bond Yields and Commercial Property

There is a second channel that gets less attention. When the policy rate comes down, bond yields follow. Not the same day, but within days, and fixed mortgage rates are priced off those yields. So the July 24, 2024 cut mattered to someone shopping for a fixed rate, not only to variable-rate holders. The same logic reaches commercial real estate, where the monthly cost of carrying an investment was coming down gradually through 2024. That side of the market moves later, but it moves.

Should You Buy? My Read After the July 2024 Cut

As of the summer of 2024 I thought rates would keep easing over the following year. Not down to 2%, but lower. That does not automatically mean home prices take off. Living costs in 2024 were still high and plenty of people were not ready to take on the risk of a new purchase. Investors who had bought condos in a city like Toronto over the previous few years and watched their unit values fall were not in a position to come back with much capital either. So my view was that much of the market would move only a little.

Right after the announcement I asked my own audience what they made of it, and the share who thought the effect on the market would be negligible came out equal to the share who thought the decision would move the Canadian market a lot. That split sounds about right for the moment we were in.

The opportunity in the summer of 2024 was in specific parts of the market, particularly across the GTA. There was no reason to be anxious either, and no reason to make a rushed decision out of fear that prices would run away. The right response was study: learn which parts of the market are the good ones and find the right property. That is the work my colleagues and I do. If you want help with it, fill out the form at the bottom of this page or book a free consultation. Stay well and take care.