Bank of Canada interest rate pause could force landlords to sell properties: experts
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The Bank of Canada’s decision to hold interest rates steady on Wednesday could put financial pressure on landlords and leave renters vulnerable, experts say.
The Bank of Canada’s decision to hold interest rates steady on Wednesday could put financial pressure on landlords and leave renters vulnerable, experts say.
The second rate hold from the BoC is likely to weigh on some landlords who hold variable rate mortgages on their investment properties and could trigger them to sell their units, according to realtors. This scenario would impact tenants as they face the risk of being displaced into a sky-high rental market, they said.
"For every month we have a rate pause, there will be landlords who will struggle to hold onto their rental properties,” Davelle Morrison, broker at Bosley Real Estate, told BNN Bloomberg in an interview on Wednesday.
She noted that those investment property owners who are currently operating at a loss will likely be forced to sell, or, increase the price of rent to keep up with costs. In either scenario, the renter gets squeezed, she added.
"Most landlords have to start charging more in rent just to keep up with heightened costs that come with interest rate hikes — which of course have a trickle down effect into the rental market at large,” Morrison added.
Another housing expert is echoing her sentiment.
Owners who are selling their properties due to financial stress have increased 300 per cent year-over-year in Toronto, Daniel Foch, broker at RARE Real Estate, told BNN Bloomberg in an interview on Wednesday.
