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Housing Markets · Lesson 4

Central banks and housing

Rate hikes cool it, rate cuts warm it - with a delay

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Central banks and housing

In this lesson

Understand how central-bank decisions flow into housing, why the effect is delayed, and what Canada saw in 2022-2024.

Key takeaways

  • Central-bank rate decisions flow through mortgage rates to buyers, sales and finally prices.
  • Canada's policy rate rose from 0.25% (early 2022) to 5% (July 2023); sales fell and prices eased in many cities.
  • Rate cuts from mid-2024 helped activity recover slowly.
  • The full effect often takes 6–18 months, partly because many mortgages renew only every few years.
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Next lesson: How governments move the housing market

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