Despite what you may be hearing in the news about increasing interest rates by some of the country’s largest banks the “Big Daddy” Bank of Canada announced today to its bench mark rate unchanged. You can learn more here.
“”Barring some massive shock, the Bank appears to be very comfortable staying on the sidelines for some time yet.”
Yet more evidence that the latest rises in mortgage rates and mortgage qualification rules and policy are acutely the result of changes to fiscal policy changes and NOT based on any meaningful improvement to the overall Canadian economy.
Posted inflation remains subdued. Remember that tracking and targeting specific inflation levels is one of the main “real” drivers of BOC decision on rates.
Yet the Bank of Canada says Canadian inflation, which it carefully analyzes when making rate decisions, is slightly below what it had anticipated.
“Barring some massive shock, the Bank appears to be very comfortable staying on the sidelines for some time yet.”
What this means is that barring any massive geopolitical or economic shocks whereby inflation all of a sudden begins to spike, I would anticipate any increases to mortgage rates to be limited. I just don’t see any new era of increasing mortgage rates, despite the fear mongering to the contrary by the media and even some government officials.
In the meantime, the country’s big banks are repeating their playbook of the past 4-5 years, where they have increased mortgage rates in the fall and put mortgage rates on sale again in the spring.
So far, just more of the same this year as banks have once again moved to increase rates this fall.
It will be interesting to see what the country’s largest banks will do with mortgage rates in the spring of 2017, in the likely absence of any movement on rates by the Bank of Canada.