The Bank of Canada raises to 1.00% on September 6, 2017. The 25-basis-point increase moves the announced target from 0.75%. Stronger-than-expected activity supports another increase.
The decision at a glance
| Policy measure | Announcement |
|---|---|
| Overnight target | 1.00% |
| Change | +25 basis points |
| Bank Rate | 1.25% |
| Deposit rate | 0.75% |
Stronger-than-expected activity supports another increase
The Bank raises the target again because activity is stronger and more self-sustaining than it expected in July. Consumption and employment remain robust, while business investment and exports show broader strength. Growth is still expected to slow in the second half, but from a higher level of output than previously forecast.
Inflation is below target but has edged higher as temporary price effects fade and economic slack diminishes. Wage and price pressure remains weaker than older relationships would suggest, and the labour market still has spare capacity. That makes the evolution of wages and productive capacity important to the next decision.
The Bank notes a stronger Canadian dollar and says future moves are not predetermined. High household debt is another reason to test the payment under the actual mortgage contract. Households should not assume either a fixed sequence of hikes or an immediate pause. Ask the lender how today's change affects payments, principal repayment and qualification under that contract.
What this means for a mortgage
The overnight target influences short-term borrowing costs, including lender prime rates. Variable mortgages and home-equity lines of credit are more directly exposed to prime-rate changes. Fixed mortgage offers also depend on bond yields, funding costs, the term and lender competition; they can move even when the Bank holds.
Put the announcement into a Greater Sudbury plan
Buying or renewing
Ask for written figures using your balance, down payment and amortization. Compare payment mechanics, prepayment options, penalties and the cash left after closing. A variable mortgage with fixed payments may change how much principal you repay instead of changing the payment immediately; the contract determines the result.
Preparing to sell
Financing affects what buyers can carry, but it does not set one price for every home. Compare recent sales and active alternatives in the same neighbourhood and price range. Condition, carrying costs, presentation and offer terms remain central to the decision.
Official announcement: Bank of Canada, September 6, 2017. The national policy decision does not, by itself, establish a change in Greater Sudbury property values.
For context, compare the July 12, 2017 increase to 0.75% with today’s decision.
For a local plan, explore the Buyer Experience or Seller Experience.
Expect Moore for Your Real Estate.
— Chad Moore, REALTOR®
— Lake City Realty Ltd., Brokerage