The Bank of Canada holds at 1.25% on March 7, 2018. Housing demand is adjusting to new mortgage rules.
The decision at a glance
| Policy measure | Announcement |
|---|---|
| Overnight target | 1.25% |
| Change | No change |
| Bank Rate | 1.50% |
| Deposit rate | 1.00% |
Housing demand is adjusting to new mortgage rules
Late-2017 housing strength followed by softer activity early this year suggests some buyers moved purchases forward ahead of new mortgage guidelines. The Bank needs more time to assess the lasting effect of those rules, provincial measures and higher interest rates. Household credit growth has slowed for three consecutive months.
Fourth-quarter growth was weaker than expected, but part of the reason was higher imports associated with business investment. That investment can increase future productive capacity, so a softer GDP headline is not the whole story. Exports recovered only partly from their earlier decline, and trade-policy uncertainty is becoming more important.
Inflation and core measures are near 2%, while wage growth remains modest for an economy near capacity. The Bank holds at 1.25% and continues to anticipate higher rates over time, cautiously. For a household planning to buy, changes in qualification can matter even without a rate move. Reconfirm the approval against the actual property and financing terms before relying on an earlier budget.
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, March 7, 2018. The national policy decision does not, by itself, establish a change in Greater Sudbury property values.
For context, compare the January 17, 2018 increase to 1.25% 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