The Bank of Canada holds at 1.25% on May 30, 2018. The case for higher rates strengthens without a move today.
The decision at a glance
| Policy measure | Announcement |
|---|---|
| Overnight target | 1.25% |
| Change | No change |
| Bank Rate | 1.50% |
| Deposit rate | 1.00% |
The case for higher rates strengthens without a move today
The Bank says developments since April reinforce the need for higher rates over time. First-quarter activity looks slightly stronger than forecast, goods exports have improved, and machinery and equipment imports suggest investment is recovering. The economy remains broadly on course for an annualized growth pace of around 2% in the first half.
Housing resale activity is still soft as buyers adjust to new mortgage guidelines and higher borrowing costs. Labour-income growth should support consumption and eventually housing, but the adjustment is not finished. A weak housing reading and improving overall activity can therefore coexist.
Core inflation remains around 2%. Gasoline prices may temporarily push headline inflation above the Bank's earlier expectation, while trade-policy uncertainty continues to restrain investment. The Bank holds and reiterates a gradual approach. A borrower should use this period to understand payment sensitivity and rate-hold terms, rather than interpret the unchanged target as assurance that the cost of borrowing will stay fixed.
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, May 30, 2018. The national policy decision does not, by itself, establish a change in Greater Sudbury property values.
For context, compare the April 18, 2018 hold at 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