​Bank of Canada interest rate pause could force landlords to sell properties: experts

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.

• From BNN Bloomberg: Full impact of past Bank of Canada interest rate hikes not yet seen: expert
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"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.

“It’s time that’s killing landlords financially. The freeze in interest rates means they are forced to carry higher costs for prolonged periods of time,” he said.

Renters are at the mercy of their landlords should they be forced to sell, he added. This leaves the average tenant at a disadvantage and creates a supply of units that will ultimately cost more to rent, he said.

“This kind of pressure could likely drive some renters who have been on the sidelines for quite some time to enter the buyer market,” he said.