1 in 3 Canadians expect BoC to drop rates in June — and already plan to spend the savings!

Canadians are hoping for rate cuts

Although 32% of Canadians expect the Bank of Canada to start rate cuts as early as June 5, 2024, almost half of respondents (42%) were convinced that the Bank of Canada would hold rates steady this month.

Still, most Canadians are hopeful. Two-thirds of Canadians surveyed say lower interest rates will make a meaningful, positive impact on their personal financial wellbeing. While half of current renters see a reduction in rates as an incentive to buy a home. This push to become a homeowner is strongest in those between the ages of 18 and 34 — with 7 in 10 planning to buy a home when rates fall.

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Canadians are ready to start spending again

According to the report, nearly 40% of Canadians have delayed a major purchase in the past year due to high interest rates.

"Consumers have said they're ready to start spending again and are just waiting for the Bank of Canada to make its move," explained Vallance, although she points out that very few consumers expect rates to return to historical lows.

If rates are cut, Canadians plan to respond:

• 42% are planning a significant purchase once rates start to decline
• 57% of these respondents will wait until further cuts before spending on larger items
• 41% of mortgage holders plan to refinance once rates decline
• 58% of Albertans, in particular, plan to refinance their mortgage as soon as rates drop

These expectations are critical, as Vallance points out that "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 [interest rate] cuts are made."

Lower rates leading to bigger purchases

According to survey results, Canadians have put off bigger purchases for quite some time. Most Canadians believe lower interest rates will make it more affordable for them to purchase or put money towards expenses, such as:

• 81% plan to pay down their mortgage
• 70% plan to purchase a new home or property
• 66% plan to update a home or property with the intention of selling
• 65% plan to spend on home renovations
• 58% plan to boost personal or emergency savings
• 48% plan to invest in retirement savings or RRSP

For those that are already planning a major spend once rates begin to decline, the most common purchases are:

• 15% say a new car
• 14% of current homeowners plan to buy a new property
• 24% of renters plan to buy a property
• 12% say they are planning a major home renovation

Planning a large purchase? Get rewarded!

If you put your car purchase, home renovation or vacation property on hold and plan to pull the trigger when rates drop, now is the time to consider how to pay for these large ticket items. One strategy is to keep the saved funds in an easy accessible bank, like a high-interest savings account, and to pay for the purchase using a rewards credit card. This strategy allows you to avoid expensive debt — as you pay the expense off using your savings — but take advantage of juicy loyalty programs.

For instance, use a cashback credit card with a 2% earn rate on a $20,000 home renovation and you'll pocket $400. It's not a king's ransom, but it will certainly offset a few weeks or months of food delivery costs.

A few good options to maximize rewards or cashback include:

• BMO CashBack World Elite Mastercard: Get 10% cashback in your first three months of spending and 5% cashback on groceries after the promotional period.
• RBC Cash Back Preferred World Elite Mastercard: Get unlimited cashback on your spending, plus complimentary Boingo Wifi account — a great option if you plan to travel this summer. There's an annual fee of $99 and new cardholders must earn a minimum of $80,000 per year to qualify for this card. Still on an earn rate of 1.5% a $20,000 purchase will get you $300 in cashback rewards.

Survey methodology

The findings of the Dye & Durham Canadian Pulse Report are the result of an Angus Reid online survey conducted between May 7 to May 9, 2024 among a nationally representative sample of 1,516 Canadians. 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.

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What to read next

• If you're planning a big spend this year, consider maximizing your reward points with a new credit card. Check out current credit card promos
• Considering a renovation? Find out how much home renovations actually cost
• Want to double-dip and maximize loyalty programs? Learn what's best when it comes to Canadian loyalty programs