Rates hikes weighed on real estate market that was 'already down': TD

Higher Bank of Canada interest rates have put downward pressure on Canada’s real estate market since the summer, following a brief spring rebound, according a new report from TD Economics.

TD economist Rishi Sondhi pointed to the central bank’s decision to end a four-month period of stable interest rates by hiking in June and July. During this period, Sondhi said the central bank was “maintaining a bias towards additional hiking.” 

The Bank of Canada hiked rates by 25 basis points in both June and July, bringing the policy rate to five per cent. Since then, the central bank has held interest rates at five per cent. 

“These hikes are hitting a market that was already down,” Sondhi wrote in the report published on Thursday. “National sales have pulled back by about five per cent, partially retracing the moderate rally this past spring.”