Bank of Canada Interest Rate Announcement

It's an exciting time in the real estate market, and there are a lot of factors to consider if you're looking to buy or sell your home. One of the biggest considerations is the mortgage market, which has been fluctuating in recent months.

For buyers, the good news is that interest rates remain low, making it an excellent time to secure a mortgage and buy a home. However, with prices rising and inventory remaining low in many areas, it can be competitive to find the right home. That's why it's important to work with an experienced real estate agent who can help you navigate the market and find the right property for your needs.

Meanwhile, sellers are seeing strong demand for their homes, with many properties receiving multiple offers and selling quickly. This is a great time to list your home if you're considering selling, as you may be able to secure a higher price than in previous years. However, it's still important to work with a real estate professional who can help you price your home appropriately and market it effectively to potential buyers.

The Bank of Canada raised its overnight rate by 25 basis points to 5 per cent this morning. In the statement accompanying the decision, the Bank noted that the Canadian economy has been stronger than expected but is expected slow as higher interest rate work their way through the economy.  On inflation, the Bank cited the recent easing of inflation to 3.4 per cent but also noted that core inflation continues to run a at 3 to 4 per cent pace and has been more persistent than anticipated.  The Bank now forecasts a return to its 2 per cent target in mid-2025 rather than in 2024. 

While inflation has come down significantly in the past year, the economy seems somewhat impervious to the Bank's efforts to slow it down. The labour market continues to add jobs at a robust pace, consumer spending was brisk during the first quarter and the housing market remains unexpectedly strong. Although the impact of rate increases can take time to be felt, we should be seeing some signs of a slowing economy emerge relatively soon. However, the likelihood of an impending recession and a related fall in interest rates now seem to fading, meaning homebuyers and homeowners may need to wait until next year for any mortgage relief. Indeed, 5-year bond yields are now near 4 per cent for the first time since 2007 which has driven 5-year fixed mortgage rates to their highest point this year.  The Bank's statement suggests it may be on pause at 5 per cent, though further rate increases could be on the horizon if the economy continues to out-perform expectations. 

Overall, the real estate market is strong and dynamic, with plenty of opportunities for buyers and sellers alike. With the right guidance and information, you can navigate this exciting market and find success in your real estate journey.