Despite the threat of continued interest rates the red hot housing market hasn’t seen much of a slow down. February home sales in Toronto were down compared to the all-time record in 2021, but represented the second most February sales in history. New listings dropped so competition between buyers, however, remained tight enough to support double-digit price growth year-over-year.
The central bank said Wednesday it was increasing its key rate by a quarter of a percentage point to 0.5 per cent in a bid to help fight inflation which is at its highest level since 1991. This led to Canadian banks to increase their prime lending rates. Canada’s Big Five banks — RBC, TD Bank, BMO, CIBC, and Scotiabank — all said they would increase their prime rates to 2.70 from 2.45%, effective March 3. The rise in rates will increase the cost of loans such as variable-rate mortgages, but won’t directly affect fixed-rate mortgages.
The MLS Home Price Index Composite Benchmark was up by 35.9 per cent year-over-year in February. The average selling price for all home types combined was up by 27.7 per cent to $1,334,544. The pace of price growth varied by home type and region, but there was relative parity between low-rise and condominium apartment growth rates.
Although The Bank of Canada said it would likely need to raise rates further to reduce inflation, which hit 5.1% in January, the demand for housing in the GTA isn’t seeing a reduction any time soon despite efforts of the Liberal government to cool the hot housing market.