Yesterday, the Bank of Canada raised its benchmark interest rate to 1.5% (up from 1.25%). It was the first rate increase in six month but the fourth increase over the last twelve months.
Despite the trade dispute between Canada and the United States, the bank expects the higher oil prices and stronger economy will offset the blow.
For the full Bank of Canada article, click here.
How does this impact mortgage borrowers?
Canada’s big banks will likely raise their prime rates.
If you are currently in a fixed mortgage, then this will have little impact on you.
If you have other loans or lines of credit where the interest rate is based off your lender’s prime rate, this interest increase might also impact you.
If you are in a variable rate mortgage, then this might be the time to readjust your mortgage. Call your mortgage professional to review your loans.
Although we still saw multiple offer situation last month, it has definitely been felt by real estate agents that the market is cooling down. As we can see from the sales-to-active ratios, the numbers have been declining since the beginning of the year, although the ratio for condos and townhouses still remained in the seller’s market. For single family house market however, this might be a good time to buy as there are more supply than demand.