Found 18 blog entries tagged as Bank of Canada.

Bank of Canada Interest Rate Announcement: Supersized Rate Hike of 100 Basis Points on July 13

The Bank of Canada was widely expected to make an increase in this morning’s interest rate announcement, but the central bank surprised everyone with a supersized hike of 100 basis points, bringing its target for the overnight rate up to 2.5 per cent. This is the Bank’s biggest move since 1998, and the fourth in a series of increases expected for 2022 as the Bank tries to tamp down the soaring inflation rate. Inflation is expected to hover around eight per cent for the next few months – well above the Bank’s two-per-cent target.

  1. What is the Bank of Canada’s current policy interest rate?
  2. When does the Bank of Canada announce its overnight rate?

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Canadians have enjoyed low interest rates for the last decade, but even more so since the onset of the global pandemic, when the Bank of Canada responded with a trio of rate cuts, bringing us to 0.25%. But 2022 has already seen three interest rate hikes in response to soaring inflation rates, which reached a 39-year high in May, at 7.7 per cent. With a fourth increase in the Bank’s interest rate, you may be wondering: How will higher interest rates affect me?

What does an interest rate hike mean if you’re planning to buy a home, if you already have a mortgage, or are carrying any other debt? Let’s take a step back to better understand what causes movement in interest rates and how a higher rate might impact you.

What Causes Interest Rates to…

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Canadian real estate with luxury homes

Are the effects of the Bank of Canada’s (BoC) tightening cycle being felt in the Canadian real estate market?

For at least two years and probably longer than that, the nation’s housing market has been sizzling, with nearly every pocket of the country experiencing soaring prices and impressive sales activity. The laws of supply and demand have been in full force since the beginning of the coronavirus pandemic – inventory is low and demand has been strong – but historically low interest rates have also played a significant role.

When rates are low, prospective homeowners can take advantage of monetary conditions to increase their purchasing power and outcompete other buyers who may be interested in the same property. Now…

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Rising interest rates and housing market

The Bank of Canada (BoC) has said it will be use its monetary policy to tamp down inflation, which currently sits at a 30-year high, joining the chorus of central banks worldwide trying to grapple with the rapidly escalating cost of living. So far this year, the BoC has already moved forward with rising interest rates three times, and Governor Tiff Macklem is preparing the financial market for more quantitative tightening in upcoming policy meetings.

But while the objective is to garner a stranglehold on a surging consumer price index (CPI) and producer price index (PPI), rate hikes will lead to financial pain for borrowers, investors and homebuyers.

Indeed, the Canadian real estate market is seeing the effects of a…

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Bank of Canada Interest Rate Announcement Raises It Another 0.5% on June 1

This morning’s interest rate announcement by the Bank of Canada reveals another 50-basis-point hike to the key rate, bringing it up to 1.5 per cent. This is the third in a series of increases expected in 2022, with the year kicking off at a low of 0.25 per cent, followed by a 0.25-per-cent bump in March and another 0.5-per-cent increase in April. Today’s increase makes the second time in the last 25 years that the Bank has implemented back-to-back increases of 50 basis points. The move appears to be having a cooling effect on hot Canadian housing markets, with Toronto and Vancouver sowing some signs of cooling. The Bank said it will use its monetary policy tools to ease…

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* How Will Higher Interest Rates Impact My Mortgage

How will higher interest rates impact my mortgage? It’s a question more homebuyers and homeowners are asking, in the wake of the Bank of Canada’s recent interest rate hikes. We consider many variables in life before making any big decision, and one of the most important ones to think about when buying a home is the current state of interest rates. While a low interest rate is desirable for a prospective buyer, as it means they have more purchasing power, lower rates may not be all they are cracked up to be.

Interest rates fluctuate. They rise and fall in response to the economy and world events, and can significantly impact the amount you pay for your home over the lifespan of your mortgage.

Typically, mortgage loans are…

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Photo by Linda McCann on Unsplash

In recent years, it’s likely you’ve heard the media, your colleagues and even politicians speak about “inflation.”

You also may have noticed prices for regular everyday items including food, gas, or larger purchases such as homes, furniture and vehicles have risen sharply since the start of the COVID-19 pandemic.

Up until a few months ago, when government officials and the media spoke about the current rise in inflation, they often defined it as “transitory”. Now, officials at the Bank of Canada are stating inflation may actually be more persistent, and have signaled the future path for Canadian interest rates may be a series of rate hikes to help bring inflation back down to within its target range of 1% to 3%.…

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variable rate mortgage

For a long time, it was a common ideology that a variable rate mortgage was ideal when purchasing a home. The thought process was based on the theory that if the rate drops, you’ll be able to reap the benefits of lower interest payments as opposed to someone who is in a fixed-rate mortgage.

Before we get into the nitty-gritty of it, let’s review how interest rates impact a mortgage and the difference between a fixed-rate and a variable-rate mortgage.

Interest rates are determined by the Bank of Canada and often reflect the state of the economy. When the economy is strong, interest rates are high. This means that borrowing money would cost more, but you should receive a higher payout on your investments. When the economy…

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Between rising interest rates, the COVID-19 pandemic, and the incoming spring market, home buyers and sellers might feel slightly overwhelmed by all of the changes happening in the 2022 housing market. 

Last year was one for the books as home inventory sank to its lowest levels ever recorded. Meanwhile, the Bank of Canada (BoC) is preparing to increase its overnight rate again, spelling potential changes for new and existing mortgage holders. With these trends in play, it leaves a lot of questions for those looking to make a move in the real estate market in 2022. 

Shaun Cathcart, Senior Economist and Director of Housing Data and Market Analysis at the Canadian Real Estate Association (CREA), has the answers to some of your important real…

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Photo by Alex Shutin on Unsplash

On March 2, 2022, the Bank of Canada began its rate hike cycle by increasing its target for the overnight lending rate by 25 basis points to 0.5%. The Bank will also be maintaining its portfolio of government bonds until it is deemed necessary to start reducing the overall size of its balance sheet.

The Bank views the Russia-Ukraine conflict as major source of uncertainty, that which has led to increases in oil and other commodity prices, stoking further global inflationary pressures, and likely causing a drag on global growth. Amidst these recent geopolitical developments however, the global economic recovery to date has so far turned out to be in line with the Bank’s projections, with some advanced economies even…

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