The Bank of Canada holds at 1.75% on September 4, 2019. Strong spring growth comes with important qualifications.
The decision at a glance
| Policy measure | Announcement |
|---|---|
| Overnight target | 1.75% |
| Change | No change |
| Bank Rate | 2.00% |
| Deposit rate | 1.50% |
Strong spring growth comes with important qualifications
Canada’s second-quarter rebound is stronger than expected, but the Bank attributes part of it to temporary gains in oil production and exports. Housing is recovering faster than anticipated as mortgage rates fall. Wages are rising, yet consumption is relatively soft, and business investment drops sharply after a strong first quarter. The Bank still expects slower activity in the second half of the year.
Abroad, the trade conflict is reducing trade and investment. U.S. consumer and government spending offer some support, but commodity prices weaken and bond yields fall to unusually low levels. Canada’s yield curve is inverted, meaning some longer-term government borrowing rates sit below shorter-term rates—a sign of cautious market expectations, not a guaranteed recession forecast.
Inflation is at 2%, and the core measures are also near target. Temporary increases in airfares, telephone services and some food prices offset cheaper gasoline in July. The Bank judges the economy to be close to capacity, while acknowledging that trade tensions are taking a toll. Borrowers should distinguish today’s policy hold from the separate decline in some longer-term financing costs.
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 4, 2019. The national policy decision does not, by itself, establish a change in Greater Sudbury property values.
For context, compare the July 10, 2019 hold at 1.75% 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