Montreal homeowners optimistic about interest rate cuts

Montreal’s real estate market was already looking up for 2025 and Wednesday’s interest rate cut will only help.

Montreal’s real estate market was already looking up for 2025. In the last quarter of 2024, sales reached pre-pandemic levels and more properties are being listed.

Wednesday’s interest rate cut will only help, says real estate broker Alec Raffa.

“[There’s] renewed optimism in the market. Every time there’s a rate cut, you’re going to see more and more people kind of jumping back in. You’re going to see investors coming back,” Raffa said.

Homeowners with adjustable rate mortgages will see an impact immediately, but that’s not the case for fixed rate mortgages.

The big five banks are offering fixed rate mortgages in the high four and five per cent range, but mortgage broker Brad Weigensberg says that could change.

“We will start seeing in the next 45 to 60 days, fixed rates come down closer to the low fours, high threes,” Weigensberg said.

A quick search shows shorter fixed rate mortgage terms have higher interest rates. Weigensberg says there’s a reason for that.

“People are asking, why is a one year and two-year rate significantly higher than the three, four and five? Because it cost the bank the same amount of labour to approve a one year, two-year mortgage as it does a three, four or five,” Weigensberg said. “The banks don’t really make their money until year three or four or five on the mortgage.”

The big question many homeowners might be asking themselves: “Should I break my mortgage?”

Weigensberg says the answer differs from homeowner to homeowner.

“If it’s a standard three month penalty it could make sense, but you’re doing it to maybe save one year of interest.”