One-in-Three Canadians Expect Bank of Canada to Begin Interest Rate Cuts in June

• Two-thirds say lower interest rates will have a positive impact on their financial wellbeing
• Nearly 40% have delayed a major purchase in the past year due to high interest rates; more than two-in-five plan a significant purchase once interest rates begin to decline
• Two-in-five Canadian mortgage holders plan to refinance their home mortgage once interest rates begin to decline
• Half of current renters, including seven-in-ten 18-34 year olds, believe lower rates will make it more likely that they buy a home in the future

TORONTO, May 30, 2024 /CNW/ - High interest rates have had a significant impact on the financial wellbeing of Canadians for over a year, with many calling for immediate rate cuts. While one-third (32%) of Canadians expect the Bank of Canada to begin dropping rates on June 5, even more (42%) believe there will not be a cut announced this time around.

According to the findings of the Dye & Durham's Canadian Pulse Report for Q2 2024, a survey of more than 1,500 Canadians on trends in the economy, technology and real estate market conducted via the online Angus Reid Forum, two-thirds (65%) of Canadians say lower interest rates will make a meaningful, positive impact on their personal financial wellbeing. Nearly two-fifths (38%) have held off on making a major purchase in the past year due to high interest rates. Among the 42% who expect to make a major purchase once rates begin to decline, more than half (57%) intend to wait for significant cuts before spending on larger items.

"It's clear that higher rates have done their job, cooling consumer spending significantly and helping to bring inflation down to much more manageable levels," says Martha Vallance, Chief Operating Officer, Dye & Durham. "Consumers have said they're ready to start spending again and are just waiting for the Bank of Canada to make its move, though few should expect rates to return to where they were before. Industries like real estate, automotive sales, construction and more – along with those industries that play critical roles in supporting them – should take note and prepare for a fast-moving market once meaningful cuts are made."

Most Canadians say they believe lower interest rates will make it more affordable for them to purchase or put money towards expenses like mortgage costs (81%), the purchase price of a new home / property (70%), the sale price of an owned home / property (66%), home renovations (65%), and personal / emergency savings (58%) or RRSP / retirement savings (48%). For those that are already planning a major spend once rates begin to decline, the most common purchases are a new car (15%), a new home / primary residence (14% overall, 24% for renters) or a significant home renovation project (12%). 

High-rate mortgage renewals could lead to a wave of refinancing later this year
Many Canadian homeowners that have had to renew their mortgages in 2023 and 2024 have been stretched by the current high interest rate environment - with some seeing their monthly mortgage payments skyrocket by thousands of dollars. More than two-in-five (41%) of Canadians with a home mortgage say they plan to refinance once rates begin to decline with Albertans (58%) in particular seeing this as a way to reduce monthly expenses.

Renters are also closely monitoring the Bank of Canada's decision, seeing lower interest rates as a glimmer of hope in their efforts to enter the housing market. Nearly three-in-five (57%) say lower rates will make it easier for them to buy a home in the future with nearly as many (50%) saying lower rates will make it more likely that they'll be able to buy a home in the future.

For younger Canadians (18-34), a significant number say lower rates will make it easier to afford the purchase price of a new home (76%) and more likely (70%) that they will eventually be able to so.

The number of Canadians planning to sell their primary residence and move to a new one in the next twelve months has remained unchanged from Q1 2024 and Q4 2023 with 12% saying this is currently in their plans. However, slightly fewer (16%, down from 18% in Q1 2024) are planning to wait until sale prices increase before selling their house or property.

Consumer comfort with the use of AI in skilled services takes a hit in Q2
Artificial intelligence (AI) continues to be top-of-mind with many Canadians. However, the number of consumers expressing discomfort with skilled service providers like doctors, lawyers, financial advisors and insurance brokers using AI increased over the past quarter.

Nearly two thirds (63%) say they are uncomfortable with doctors / medical providers and lawyers / notaries using AI to support/conduct their services, up from 62% and 61% respectively in Q1 2024. More than half also say the thought of investment, financial or tax advisors (58%), insurance brokers (55%), mortgage brokers (54%) and real estate agents / brokerages (52%) using AI makes them uncomfortable.

"It's clear that there is still a very large education piece that skilled service providers need to be mindful of to help their customers get fully on board with AI," says Scott Bleasdell, Chief Product Officer, Dye & Durham. "The average Canadian still wants to know that a human is involved in the process, even if AI is doing a lot of the heavy lifting. Transparency about how AI is and isn't being used and the benefits it provides to the client will be critical in helping legal professionals and other skilled service providers foster widespread acceptance of AI use in their offerings."

About the Survey
Conducted quarterly, the Dye & Durham Canadian Pulse Report is designed to uncover trends and insights into Canadian sentiment surrounding three key areas: the economy, technology and the real estate market. The findings of the report are the result of a survey conducted by Dye & Durham from May 7-9, 2024 among a nationally representative sample of n=1,516 Canadians who are members of the online Angus Reid Forum, balanced and weighted on age, gender, region and education. For comparison purposes only, a probability sample of this size has an estimated margin of error of +/- 2.5 percentage points, 19 times out of 20. The survey was offered in both English and French.

About Dye & Durham Limited
Dye & Durham Limited provides premier practice management solutions empowering legal professionals every day, delivers vital data insights to support critical corporate transactions and enables the essential payments infrastructure trusted by government and financial institutions. The company has operations in Canada, the United Kingdom, Ireland, Australia, and South Africa. Additional information can be found at www.dyedurham.com.

SOURCE Dye & Durham Limited

Matt Roth, Vice President, Global Brand and Communications, E: [email protected], P: 647-518-6754