{"id":11574,"date":"2019-02-03T10:10:11","date_gmt":"2019-02-03T18:10:11","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=11574"},"modified":"2019-01-29T16:41:10","modified_gmt":"2019-01-30T00:41:10","slug":"bank-of-canada-combined-effect-of-tighter-mortgage-guidelines-higher-interest-rates-had-more-negative-impact-than-previously-estimated","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2019\/02\/bank-of-canada-combined-effect-of-tighter-mortgage-guidelines-higher-interest-rates-had-more-negative-impact-than-previously-estimated\/","title":{"rendered":"Bank of Canada : Combined Effect of Tighter Mortgage Guidelines &#038; Higher Interest Rates Had More Negative Impact Than Previously Estimated"},"content":{"rendered":"<p style=\"text-align: justify;\">Economic growth in Canada from residential real estate investments will go negative in 2019, according to the Bank of Canada (BOC), which has conceded that stiff new mortgage regulations, local housing restrictions and rising interest rates have had a larger and more negative impact than expected.<\/p>\n<p style=\"text-align: justify;\">Consumer spending and housing investment \u201chave been weaker than expected\u201d as housing markets adjust to \u201cto municipal and provincial measures, changes to mortgage guidelines and higher interest rates,\u201d according to a BOC statement.<\/p>\n<p style=\"text-align: justify;\">\u201cStaff analysis suggest that the combined effect of tighter mortgage guidelines and higher interest rates has been larger than previously estimated,\u201d the BOC noted in its January statement.<\/p>\n<p style=\"text-align: justify;\">The BOC left the overnight benchmark policy rate at 1.75% in its January 9 setting.<\/p>\n<p style=\"text-align: justify;\">In 2018 Metro Vancouver housing sales fell 32% from a year earlier, to the lowest level since 2000 and 25% below the 10-year average. Prices for Vancouver-area detached homes in some regions dropped at least 10% compared with a year earlier, with even more dramatic declines in higher-end neighbourhoods.<\/p>\n<p style=\"text-align: justify;\">The benchmark price for a West Vancouver detached house as of December was down 13.5% from a year earlier and dropped 11.8% in Vancouver\u2019s west side, the Real Estate Board of Greater Vancouver reported.<\/p>\n<p style=\"text-align: justify;\">\u201cThe BC government in its 2018 budget increased the foreign-buyer tax to 20% and added a speculation and vacant home tax, which \u2013 in addition to rising interest rates \u2013 dampened sales, especially for more expensive single-family homes,\u201d noted Sherry Cooper, chief economist with Dominion Lending Centres.<\/p>\n<p style=\"text-align: justify;\">The City of Vancouver is also taxing empty homes for the first time in 2019.<\/p>\n<p style=\"text-align: justify;\">The varied disincentives to the demand side are also affecting the supply of new housing in Metro Vancouver, with housing starts falling 11% in 2018 from a year earlier, according to Canada Mortgage and Housing Corp. (CMHC).<\/p>\n<p style=\"text-align: justify;\">Surrey led the decline in the region with a 27% plunge in starts, noted CMHC market analyst Eric Bond.<\/p>\n<p style=\"text-align: justify;\">The contribution to average annual real economic growth from housing investment in Canada has now been revised down to minus 0.1% in 2019 from the plus 0.1% that the BOC forecast last October.<\/p>\n<p style=\"text-align: justify;\"><a href=\"https:\/\/biv.com\/article\/2019\/01\/regulatory-overkill-cited-housing-outlook-goes-negative\">Regulatory Overkill Cited as Housing Outlook Goes Negative<\/a> by Frank O&#8217;Brien | Business in Vancouver<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Economic growth in Canada from residential real estate investments will go negative in 2019, according to the Bank of Canada (BOC), which has conceded that stiff new mortgage regulations, local &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2019\/02\/bank-of-canada-combined-effect-of-tighter-mortgage-guidelines-higher-interest-rates-had-more-negative-impact-than-previously-estimated\/\">read more<\/a>]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[],"class_list":["post-11574","post","type-post","status-publish","format-standard","hentry","category-market-updates"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Bank of Canada : Combined Effect of Tighter Mortgage Guidelines &amp; 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