The long awaited and anticipated interest rate announcement was released from the Bank of Canada this afternoon. As many expected, the Bank of Canada raised the interest rate to 1.25% – the highest level since 2009. A strong Canadian economy, as demonstrated by a positive job market, an ever increasing gross domestic product, and ongoing increases in the cost of living, were cited as some of the primary reasons behind today’s increase.
“Recent data have been strong, inflation is close to target, and the economy is operating roughly at capacity,” said the Bank of Canada in an official statement.
This interest rate hike will unquestionably have an impact on savings, GICs and mortgages, allowing savers to earn more money on their savings, while simultaneously causing borrowers to pay more on things like mortgages. Despite the small change in the interest rate, the impact will be felt across the country, particularly when it comes to mortgages. As a result, experts are predicting that the housing market will slow down.
CBC reported that, “A homeowner today with a $300,000 25-year mortgage can easily get a variable rate starting at 3%. But if a lender hikes their rate three times to keep pace with the Bank of Canada, that costs borrowers an extra $100 per month”
With new mortgage rules and regulations, plus the interest hike, Canada’s real estate market is predicted to experience a slow patch in 2018 while buyers wait out their home purchases and work hard to withstand the stress test.
Now is the right time to connect with a professional mortgage broker to understand where you stand in this new real estate marketplace. The team at Capital Mortgages happily extends our services to help you understand the new interest rate increase and how it will affect you, your family, and your finances. Contact our team and speak with one of our experienced mortgage brokers today.