The Bank of Canada’s decision to hold interest rates at elevated levels could push over-leveraged homeowners into the rental market – driving prices higher in turn, experts say. 
The central bank decided to keep its overnight lending rate at five per cent on Wednesday, holding borrowing costs and mortgage rates at high levels after its steep hiking cycle began early last year.
For some Canadians homeowners who are already struggling to keep up with their mortgage payments, a period of elevated interest rates will be enough to force them into selling their properties, John Pasalis, president of Realosophy Realty, told on Wednesday. 
“We’re likely still going to see pressure in the rental market because even though rates may be on hold, there is a lot of over leveraged homeowners who will be forced to sell and enter into the rental market, at least for the short term,” he said. 
Pasalis explained that in this environment, it is not uncommon to see landlords downscale their homes in an effort to clear some debt, or offload investment properties, which would displace current renters into a higher-priced market. 
“While we are seeing more inventory come online and pricing cooling just a bit, I think the pressures in the rental market will persist so long as rates remain high,” Pasalis cautioned 
A hold on rates will bring relief for some landlords, but every month there’s an investment property owner who simply can’t afford to keep up with the costs, said Davelle Morrison, broker at Bosley Real Estate Ltd.
“With each month that passes you will have some people that will be forced to sell in this environment, and ultimately renters end up playing musical chairs because there is little supply for them to choose from,” she told on Wednesday. 
As a result, Morrison believes that most renters will stay in their units for as long as possible. 
“Rents are just so high. I would think that for a lot of renters they would stay put and not move in the heightened rate environment,” she said.