{"id":17795,"date":"2021-05-04T15:15:00","date_gmt":"2021-05-04T22:15:00","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=17795"},"modified":"2021-04-23T08:24:42","modified_gmt":"2021-04-23T15:24:42","slug":"interest-rates-rise-sooner-than-expected-dont-worry","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2021\/05\/interest-rates-rise-sooner-than-expected-dont-worry\/","title":{"rendered":"Interest Rates Rise Sooner Than Expected? Don’t Worry!"},"content":{"rendered":"

The Bank of Canada expects the country\u2019s economy to rebound faster than expected, and that could mean interest rate hikes are in the cards next year instead of in 2023 as previously predicted.<\/p>\n

The Bank of Canada predicts GDP growth of 6.5% this year, up from its initial forecast of 4%, and while it will hold rates until the economy has recovered, that could happen a year ahead of schedule. However, where the housing market is concerned, that would still have a negligible effect, which means the white-hot market won\u2019t be slowing down any time soon.<\/p>\n

\u201cWhat the Bank of Canada does with prime over the next 12-24 months is 100% not relevant to the housing market because any kind of moves they make will be incremental, i.e. 0.25% at a time, and cumulative to what total?\u201d said Dustan Woodhouse, president of Mortgage Architects. \u201cA 0.75% or maybe a 1% increase still means nothing for Canadians with mortgages because 80% of Canadians are in fixed mortgages and the other 20% in variable rate mortgages were stress tested at 4.79%, so an increase from 1.45% to 1.95% or 2.45%, again, is too small to cause anybody to start selling their homes and increase the supply of homes.\u201d<\/p>\n

On the contrary, added Woodhouse, whenever policymakers intervene, irrespective of how much or how little, it sets off a buying frenzy.<\/p>\n

\u201cWhat ends up happening if interest rates increase is the opposite of what policymakers would prefer, and that is the fear of missing out increases significantly,\u201d he said. \u201cIf interest rates rise, people think, \u2018We\u2019d better hurry up and buy.\u2019\u201d<\/p>\n

The COVID-19 pandemic was the obvious impetus for Canada\u2019s central bank plunging rates, and given that mortgage rates could be had at sub-2%, Canadians began chasing those elusive single-family detached homes. Leah Zlatkin, mortgage broker and expert with LowestRates.ca, says it will still take quite a while until interest rates rise to a level that dissuades Canadians from buying homes.<\/p>\n

\u201cThe bank has changed its wording around the timing of the rate increase, and this shift in tone and predicted timeline likely means we\u2019ve seen the end of the record-low mortgage rates we have seen on offer from lenders in the past,\u201d she said. \u201cWhile the record low rates may be gone, historically, we\u2019ll still be at very low mortgage rates, which is good news for buyers,\u201d she said.<\/p>\n

And, as Woodhouse noted, nothing is set in stone.<\/p>\n

\u201cOn top of all of that, it\u2019s all still speculative language,\u201d he said. \u201cThere\u2019s no commitment to raising rates at that time; it\u2019s just a vague suggestion that it might happen.\u201d<\/p>\n

Don’t Worry If Interest Rates Rise Sooner Than Expected<\/a> by Neil Sharma | Canadian Real Estate Wealth<\/p>\n","protected":false},"excerpt":{"rendered":"

The Bank of Canada expects the country\u2019s economy to rebound faster than expected, and that could mean interest rate hikes are in the cards next year instead of in 2023 … [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":[9],"tags":[],"class_list":["post-17795","post","type-post","status-publish","format-standard","hentry","category-mortgage"],"yoast_head":"\nInterest Rates Rise Sooner Than Expected? 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