08:29 AM EDT, 08/07/2024 (MT Newswires) -- Toronto home sales were up 3.3% y/y in July, representing a

still-weak level of activity, all while inventory continues to

build, said Bank of Montreal (BMO).

Vancouver sales were similarly down 5% y/y, with outstanding inventory now 22% above the 10-year average, noted the bank.

Indeed, the market balance remains weak in these major

markets -- less so in Montreal, and even less so in Calgary, although the latter is cooling now too, stated BMO.

Mortgage-rate relief lies ahead and maybe "eventually" it will be enough to wake the market up, pointed out the bank.

BMO sees a steady stream of Bank of Canada (BoC) rate cuts offering another 100 bps of easing by January. That should take most variable rates below 5%.

As of now, most Canadians are already borrowing in the mid-to-high 4% range in the fixed-rate market. But, the recent dive in five-year Government of Canada (GoC) yields should push through even more relief, similar to levels seen in early 2023, added the bank.

In some ways, affordability and investment arithmetic start to

make more sense with borrowing costs below 4%, all else

equal. That would be consistent with five-year yields down

closer to 2.5%, according to BMO.