The Bank of Canada’s decision to keep interest rates on hold on Wednesday could put financial pressure on landlords and leave renters vulnerable, experts say.
The BoC’s second interest rate hold could weigh on some landlords holding variable-rate mortgages on investment properties, prompting them to sell their units, realtors said. This scenario will affect tenants as they face the risk of being relegated to a very high rental market, they said.
“There will be some landlords who will struggle to keep their rentals because interest rates are suspended every month,” says Davelle Morrison, a broker at Bosley Real Estate. told BNN Bloomberg in an interview Wednesday.
She noted that owners of investment properties currently operating at a loss are likely to be forced to sell or raise rents to keep up with costs. In either scenario, renters will be under pressure, she added.
“Most landlords will have to start charging more rent just to meet the rising costs that come with rising interest rates. added Mr.
Another housing expert agrees with her opinion.
Toronto has seen a 300% year-over-year increase in owners selling their properties due to economic stress, said RARE Real Estate broker Daniel Foch. told BNN Bloomberg in an interview Wednesday.
“It’s time to kill landlords financially. Freezing interest rates means they’re being forced to incur higher costs for an extended period of time,” he said.
Tenants would be at the mercy of their landlords if forced to sell, he added. This puts the average tenant at a disadvantage, creating a supply of units and ultimately costing them more to rent, he said.
“This kind of pressure could push some renters who have been on the sidelines for quite some time into the buyer’s market,” he said.
