Jumbo Rate Cut from Bank of Canada

Latest News Trish Pigott 23 Oct

As expected, the Bank of Canada cut the overnight target rate by .50%.  The largest cut we have seen since the pandemic and well deserved for our Variable Rate Mortgage holders (including me) who have continued to ride out the past two years. Inflation and all economic data supported this rate cut.

DLC’s own economist, Dr. Sherry Cooper is anticipating we could see a total of another 1.25% cuts to this rate by Spring of next year.  This morning’s .50% rate cut reinforces speculation of another .50% cut in December.  However, the Bank will likely need to see continued weak economic data and low inflation to prompt another big move.

Below is more detail that came from Sherry Cooper and her bottom line is that, we will see a more robust market with the recent mortgage rule changes, lower rates and so many people that have been sitting on the sidelines.

In Dr. Sherry Coopers report today, she outlines that lower rates will trigger a rebound in the housing market with the following details that the Bank of Canada pointed out;

“Resales and renovations are anticipated to recover as interest rates decline. Renovations should also be supported by a projected rise in house prices. Recent changes to government mortgage insurance rules are expected to bolster housing demand. Although population growth should ease, the level of demand is expected to remain robust and support new construction. Lower interest rates may also facilitate some increase in housing supply by easing financing costs. However, constraints on the amount of land available for new homes, zoning restrictions and a lack of skilled labour are expected to limit the pace of construction, particularly over the near term. As a result, growth in housing demand is expected to outpace increases in supply. Unlike other sectors of the economy that are experiencing excess supply, the housing market is projected to remain tight. House prices are expected to rise, but the pace of increases will likely be restrained because some home buyers will face affordability challenges”.

Today’s action is great news for the Canadian economy and housing activity. Market participants are now expecting home resales to pick up sharply in the first quarter of next year. The coming spring housing season should be robust, boosting sales and prices.  If you would like to read the full article CLICK HERE

 

Now is also a great time to look at your own mortgage if you have one and see if you have room to improve your rate.  Often times it makes sense to pay a penalty and break the term early as you may reduce your monthly payments and save in interest overall.  We can help with that, reach out and we will run different scenarios for you to see what makes sense.

Contact us at the office at 604-552-6190 or support@primexmortgages.com

Breaking News for Homeowners

Latest News Trish Pigott 25 Sep

Canada’s Bank Regulator Kills the Stress Test for Straight Switch Mortgages

Shout out to Robert McLister Sep 25, 2024 5:49 PM ET for the details around today’s Breaking Mortgage News

In a significant win for consumers, the Office of the Superintendent of Financial Institutions (OSFI) has kicked the stress test to the curb for straight switches of uninsured mortgages.

Starting November 21, if you’ve got an uninsured mortgage, you can switch lenders without having to prove you can afford a rate that’s at least 200 bps higher.

Since 2018, the industry’s been nagging regulators for this change, and finally, the right people listened.

OSFI tells us:

“We can confirm that today in discussion with the Globe and Mail, the Superintendent of Financial Institutions, Peter Routledge indicated that OSFI intends to inform industry we will end our expectation that lenders apply the Minimum Qualifying Rate (MQR) to straight switches of uninsured mortgages at renewal.”

“Straight switches are uninsured mortgages that are renewed at a new lender under the mortgagor’s current amortization schedule and current loan amount under that amortization schedule,” a regulator spokesperson added.

“There are two primary reasons for this change. First, we are listening to what we have heard from industry and from Canadians about the imbalance between insured and uninsured mortgagors at the time of mortgage renewal.”

“Second, when we look at the data over time, we have observed that the prudential risks that this was intended to address have not significantly materialized. As a prudential regulator we enable banks and lenders to compete and take reasonable risks.”

“We are working with FRFIs to ensure they are prepared for this change and intend to formally communicate our intentions as part of our quarterly regulatory release pilot, the next date for which is November 21, 2024.”

What it means

Today, if you want to switch lenders for a better deal on the average $300,000 mortgage, you need to prove $81,300 of income.

Once this new policy takes effect, that drops to $71,000 of income, 12.7% less.

This sample scenario above assumes a 4.99% rate, no other debts, a 20-year remaining amortization, no condo-fees and typical property tax and heat assumptions.

Ballpark industry estimates have suggested that OSFI’s policy blocked at least 5% to 10% of switches, but that number grew as rates soared in the last hike cycle.

With this restriction lifted, borrowers might save anywhere from 5 to 25 bps on a prime renewal rate, maybe more. We’re talking $1,400 of savings over five years, assuming a 10 bps average rate improvement on a $300,000 switch.

 

In closing, we must say hats off to OSFI for re-looking at the data and making the right call for consumers here. It mustn’t have been easy, given their firm opposition to stress-test-free switches previously, but OSFI did the right thing. And that’s a credibility booster in industry circles.

Thank you Rob for such great insight as always!

Housing Market Update from Dr. Sherry Cooper

General Trish Pigott 15 Feb

Canadian Home Sales Continued Their Upward Trend in January As Prices Fell Modestly
The Canadian Real Estate Association announced today that home sales over the last two months show signs of recovery. National sales were up 3.7% between December 2023 and January 2024, building on the 7.9% gain in December. The chart below shows that despite the two-month rise, sales remain 9% below their ten-year average. According to Shaun Cathcart, CREA’s Senior Economist, “Sales are up, market conditions have tightened quite a bit, and there has been anecdotal evidence of renewed competition among buyers; however, in areas where sales have shot up most over the last two months, prices are still trending lower. Taken together, these trends suggest a market that is starting to turn a corner but is still working through the weakness of the last two years.”

National gains were once again led by the Greater Toronto Area (GTA), Hamilton-Burlington, Montreal, Greater Vancouver and the Fraser Valley, Calgary, and most markets in Ontario’s Greater Golden Horseshoe and cottage country.

The actual (not seasonally adjusted) number of transactions was 22% above January 2023, the most significant year-over-year gain since May 2021. While that sounds like a resounding rise in activity, January 2023 posted the weakest transaction level in nearly twenty years.

There is pent-up demand for housing, and recent buyers are lured back into the market by the recent price decline and the fear that prices could rise significantly once the Bank of Canada starts cutting interest rates. 

New Listings

The number of newly listed homes increased 1.5% month-over-month in January, although it remains close to the lowest level since last June.

“The market has been showing some early signs of life over the last couple of months, probably no surprise given how much pent-up demand is out there,” said Larry Cerqua, Chair of CREA.

With sales up by more than new listings in January, the national sales-to-new listings ratio tightened further to 58.8% compared to under 50% just three months earlier. The long-term average for the national sales-to-new listings ratio is 55%. A sales-to-new listings ratio between 45% and 65% is generally consistent with balanced housing market conditions, with readings above and below this range indicating sellers’ and buyers’ markets, respectively.

There were 3.7 months of inventory on a national basis at the end of January 2024, down from 3.8 months at the end of December and 4.1 months at the end of November. The long-term average is about five months of inventory.

Home Prices

The Aggregate Composite MLS® Home Price Index (HPI) fell by 1.2% month-over-month in January 2024, adding to the 1.1% price decline in December.

Price descents of late have been predominantly in Ontario markets, particularly the Greater Golden Horseshoe and, to a lesser extent, British Columbia. Elsewhere in Canada, prices are mostly holding firm or, in some cases (Alberta and Newfoundland and Labrador), continuing to rise.

The Aggregate Composite MLS® HPI was up 0.4% year-over-year in January 2024, similar to readings over the past six months.

Bottom Line

Sales in December and January generally run at about half the peak spring season pace. That could be especially true this year, with interest rates likely to begin falling by mid-year. A strong housing rebound is coming. Housing markets have bottomed, buyer sentiment is improving and fixed mortgage rates have started declining.

Housing markets in Toronto, Vancouver and Montreal are relatively balanced again, and with the spring season, we will see a rise in new listings.

In other news, the inflation data released yesterday in the US were higher than expected, pushing rate-cut forecasts further out. With the strength in the US economy, the 5-year government of Canada bond yield has quietly risen more than 50 basis points this year.

Canada’s Housing Minister, Sean Fraser, said he expects the fall in interest rates this year to encourage builders to ramp up their activity, helping to alleviate some of the country’s crunched housing supply. At a news conference yesterday, the minister said, “My expectation is if we see a dip in interest rates over the course of this year, a lot of the developers that I’ve spoken to will start those projects that are marginal today.”

Sean Fraser, asked whether he’s concerned that Bank of Canada rate cuts will unleash pent-up demand and higher home prices, said lower borrowing costs should also lead to an increase in supply. Fraser said whatever happens with rates, the government’s course of action will remain the same. “We need to do everything we can as quickly as we can to build as many homes as we can. And that’s going to be true today and six months from now, regardless of what may happen in the interest rate environment that we’re dealing with.”

At a news conference last week, Bank of Canada Governor Tiff Macklem said that while he’s heard from developers who’ve indicated higher rates are delaying projects, lowering rates would have a more significant impact on demand.

“It’s very clear in the data that the effects of interest rates on demand are much bigger than those on supply,” he told reporters.

CLICK HERE to read the full report

$20K More in 2024 Contest!

General Trish Pigott 4 Oct

Exciting news for First national clients! 

Imagine beginning the new year with an extra $20,000 towards your mortgage – a substantial boost that can truly make a difference. With such financial momentum, the possibilities are endless, and dreams can become reality.

If you have your mortgage with First National, then you are a lucky one as they are thrilled to introduce the $20K more for 2024 contest, offering First National clients the opportunity to win a $20,000 mortgage prepayment. Entering is simple, and every First National mortgage is eligible for one entry into the contest.

Here are the key details:

  • Contest Period: October 1st – December 15th, 2023
  • Contest Prize: $20,000 mortgage prepayment, to be awarded in January 2024

Entering is a breeze: 

  • Log in to My Mortgage
  • Click on the contest entry image
  • Sign up for electronic Annual Statements

Already registered for electronic annual statements? You can still enter the contest! Click on the contest entry image and answer the contest question.

What would 20K more for 2024 allow you to do?  Feel free to call our office at 604-552-6190 if you would like more information or how to obtain a First National mortgage. Good luck! 

Trish & The Primex Team

Market Beware: Subject Free Offers

General Trish Pigott 9 Aug

When purchasing a home, most offers include conditions or subjects, which are requirements or criteria to be met before the sale can be finalized and the property is transferred. Some of the most common subjects include:

  • Financing approval
  • Home inspection
  • Fire/home insurance protection
  • Strata document review if appliable

The purpose of these subjects is to protect the buyer from making a poor investment and ensure no hidden surprises regarding financing, insurance, or the state of the property.

These conditions are written up in the purchase offer with a removal date. The seller agrees to this before the sale is finalized. The deal can go through, assuming the subjects are lifted by the removal date. If the subjects are not lifted (perhaps financing falls through or something is revealed during the home inspection), the buyer can waive the offer, and the purchase becomes void.

However, recently, especially in heightened housing markets, subject-free (or condition-free) offers have emerged. These are purchase offers that are submitted without any criteria required! Essentially, what you see is what you get.

Below we have outlined the impact of subject-free offers on both buyers and sellers to help you better understand the risks and outcomes:

Pros of Subject-Free Offers

  • Buyers: The main benefit of a subject-free offer for a buyer is the ability to “beat the competition” in a heated market. However, it is not without risks.
  • Sellers: Typically, a subject-free offer will include a competitive price, willingness to work with the dates the seller prefers, and evidence that the buyer has already done as much research as possible. If time is sensitive for the seller because they are trying to purchase another home or want to move as soon as possible, they may also choose your offer over subject offers to expedite the process.

Cons of Subject-Free Offers

  • Buyers: As a buyer submitting a subject-free offer, you are assuming a great deal of risk in several areas, including financing, inspection, and insurance:
    • Financing: While buyers may feel that they have a pre-approval, so they don’t require a subject to financing, it is crucial to recognize that a pre-approval is not a guarantee of funding. If you submit a subject-free purchase based on a pre-approval, buyer beware. The financing is subject to the lender approving the property and the sale, from the price and location to the property type or other variables the lender deems essential. By submitting a subject-free offer without a financing guarantee (or an inspection, title check, etc.), there is a risk that the deal can fall through. Even when you do not include subjects on the offer, you still are required to finance your purchase. In addition, as sales are typically submitted with a deposit, there is a risk that the buyer will lose their deposit if the subject-free offer falls through. This amount can vary in the thousands and is typically a percentage of the purchase price or down payment.
    • Inspection & Insurance: If a buyer is also opting to skip the home inspection and home insurance protection subjects to have the offer accepted, then they assume massive risk as they do not know what they are getting and whether or not the property is up to code for insurance.
    • Due Diligence: With subject-free offers, there is no opportunity for due diligence after the offer. This requires the buyer to do all their research before their initial bid. Because it is firm and binding, a buyer who decides to back out will likely be met with severe legal ramifications. Submitting an offer without subjects is not due diligence and is at the buyer’s behest.
  • For Sellers: When it comes to the individual selling the property, there is less risk with subject-free offers but not zero. While the benefit is essentially there is no wait to accept the offer on the seller’s side, they do not know for sure if financing will come through.

Financing Around Subject-Free Offers

When submitting a subject-free offer, it is up to the buyer to do as much due diligence as possible before submitting. They must identify what the lender seeks to ensure they walk away with a mortgage. Though approval is never certain, prospective buyers placing a subject-free offer should do their best to secure financing beforehand.

Contractual Obligations

Be mindful when it comes to purchasing offers versus purchase agreements. While your purchase offer is a written proposal to purchase, the purchase agreement is an entire contract between the buyer and seller. The purchase offer acts as a letter of intent, setting the terms you propose to buy the home. If financing falls through, for example, the contract is breached, where the buyer may lose the deposit.

It is also essential to be aware of a breach of contract if a seller chooses to take action. For example, if you submit a subject-free offer of $500,000 and cannot secure financing for that offer, and the seller turns around and is only able to get a $400,000 deal with another buyer, they could potentially sue the initial buyer for the difference due to breach of contract.

Preparing a Subject-Free Offer

If you have decided to go ahead with a subject-free offer, regardless of the risks, there are some things you can do to mitigate potential issues, including: 

  • Get Pre-Approved: Again, this is not a guarantee of financing when you make an offer, but it can help you determine whether you would be approved.
  • Financing Review: Identify what the lender seeks to ensure they walk away with a mortgage. Though approval is never certain, prospective buyers placing a subject-free offer should do their best to secure financing beforehand.
  • Do Your Due Diligence: Look into the property and determine if there have been significant renovations or a history of damage. This could come in the form of a Property Disclosure Statement. While this statement cannot substitute a proper inspection, it can help identify potential issues or areas of concern. If possible, conduct an inspection before submitting your bid/offer.
  • Get Legal Advice: This can help you determine your potential risk and ramifications of the offer, should it be accepted or otherwise.
  • Title Review: Be sure to review the title of the property.
  • Insurance: Confirm that you can purchase insurance for the home. Remember that an inspection may be required for this, but in some cases, you can substitute for a depreciation report if it is recent.
  • Strata Documents (if applicable): Thoroughly review strata meeting minutes and related documents to determine areas of concern.

While there are things that can be done to help with subject-free offers, it is still risky. Ultimately submitting an offer with subjects gives you the time and ability to gather information on the above and access to the property or home for inspections.

Before making any offers, get a Pre-Approval in place so you can make the best decision. If you are intent on submitting a subject-free offer, discuss it with your real estate agent, as they can determine if a subject-free offer is necessary or if a short closing window would suffice to seal the deal. A good realtor will also keep you informed of potential interest and other bids during the process. Their goal should be to maximize your opportunity and minimize your risk.

Getting ready to put an offer in on your dream home? Call us first, we have many strategies to help shorten the traditional subject period and make your offer more competitive without going subject free to protect yourself.

604-552-6190

support@primexmortgages.com

Trish & The Primex Team

Bank of Canada’s July Announcement & What This Means for You.

General Trish Pigott 12 Jul

The Bank of Canada announced this morning that the key interest rate will be raised another 25 basis points. This morning’s announcement will be the fifth interest rate announcement of 2023, but the 10th rate hike since the start of the tightening in 2022, with three more scheduled for the rest of this year. The next announcement is September 6th.

Prime Rate is now at 7.20%, the highest it’s been in 22 years.

Last month’s announcement raised the key rate another 0.25%. These rate hikes are supposed to relieve inflation. Canada’s inflation rate rose to 8.1% in June, but Statistics Canada reports that consumer spending has remained high. The annual change in the Consumer Price Index measures inflation.

The BoC’s goal is to keep inflation around 2%, but their forecasters are currently predicting inflation will return to 2% closer to mid 2025. The Forecasters say that this is due to excess demand, higher than expected housing prices and higher than expected prices for tradable goods.

Experts weren’t sure if this rate hike would bring another rate hike or hold. Experts shared that if the BoC increased the rate by another 0.25%, we should see a decrease in prices in the housing market.

Over the past two years, prices of goods and services have risen rapidly, corrupting the dollar’s purchasing power and making life less affordable for Canadians. Raising the rates makes it more expensive for households and businesses to borrow money and service their debts. Higher rates will eventually reduce demand for goods and services, slowing the pace of price increases.

Interest rate changes often fully impact economic growth inflation 18 to 24 months after an announced change.

CIBC Senior economist Andrew Grantham seems to disagree with the interest rate hikes, calling recent hikes “unnecessary” and a “mistake.” Grantham said that current consumer spending is still lower than pre-pandemic levels, suggesting that much of the growth in consumer spending is levelling out to regular numbers since the pandemic lock down.

If you are concerned about increased mortgage payments or how this might affect you, please do not hesitate to reach out. We can analyze your current situation and assess your goals and needs for the upcoming years and find the best option for you. We have been able to help many clients switch from Variable to Fixed these past few months to save them from the increasing payments out of their control. If you are wondering how restructuring your mortgage can help free up cash flow or manage your debt, then let’s chat!

 

CLICK HERE to book a quick call to review your mortgage!

604-552-6190

support@primexmortgages.com

Trish & The Primex Team

Will Prime Rate Increase?

General Trish Pigott 21 Jun

The Bank of Canada recently announced a rate increase of 0.25% on June 7th. Making their prime rate 6.95%, a 22-year record high.

The prime rate affects variable-rate mortgages and personal & home equity lines of credit. The increase translates into roughly $15 monthly for every $100,000 worth of mortgage debt for variable-rate mortgage holders.

The Bank of Canada announced this rate hike because of its need to control the excess spending in this economy and the rising inflation rate.

Economists expect to see another rate increase in July of 0.25% again.

But this doesn’t only affect variable interest rates. The fixed-rate impacts mortgage borrowers through bond yields, which determines where fixed rates stand. The rise in the Bank of Canada rate hike and the expectation of another increase next month caused bonds to plunge and yields to surge to a 15-year high. This resulted in lenders increasing their fixed rates over the past several weeks. This impacts new buyers and those with a mortgage renewal coming up.

The earliest rate cuts are now expected in the summer of 2024.

It’s a similar scenario south of the border, where additional rate hikes are now likely despite yesterday’s rate pause by the Federal Reserve. New projections show they expect the benchmark rate to rise by another half a percentage point, while other officials believe it needs to move even higher.

The latest rate hikes have made fixed mortgage rates under 5% a “rare find.” Almost every mortgage product has rates that start at 5% and 6%. It is recommended that anyone in the market for a mortgage act right away to get a rate held for them. We will likely see more hikes to fixed-rate mortgages.

Anyone who is in the market for a mortgage and is still deciding what fixed rate term to choose, we are here to remind you that you can break your mortgage term. It does come with a penalty, but it can be broken. If you lock into a fixed-rate mortgage now, and the rates start to come down in the upcoming years, you are more than welcome to break the mortgage term and lock into a new rate.

Especially those with a variable rate mortgage who are struggling to ride this wave of rate increases are encouraged to talk with a mortgage expert here at Primex Mortgages to see if locking into a fixed rate mortgage makes sense for you.

Trish & The Primex Team

Contact us today!

604-552-6190

support@primexmortgages.com

CLICK HERE to book a quick call to review your mortgage!

Read more about the mortgage industry at www.canadianmortgagetrends.com

 

The Bank of Canada Announcement & What This Means For You.

General Trish Pigott 7 Jun

This morning it was announced that the Bank of Canada increased its rate by .25%. The rate went from 6.70% to 6.95%. The central bank’s key interest rate has not been this high since April 2001.

After two consecutive rate pauses from the Bank of Canada, the bond market and the GDP are trending upward, putting more weight on the Bank of Canada. Almost expecting another rate increase rather than continuing to pause.

Several factors led to the bank’s decision to raise the key interest rate, including economic growth in Canada. Gross Domestic Product exceeded expectations in the first quarter of this year, growing by 3.1 per cent.

Despite the fact that most households have less disposable income, consumer spending is not slowing at a pace that gives the Bank of Canada confidence that inflation will tick downward. The Spring real estate market has had no shortage of open house activity and multiple offer scenarios once again.

Canada’s economy was stronger than expected in the first quarter of 2023, with GDP growth of 3.1%. Consumption growth was surprisingly strong. In addition, spending on interest-sensitive goods increased and, more recently, housing market activity has picked up.

In April, inflation increased for the first time in 10 months to 4.4%. The bank still expects inflation to decline to 3% by this summer, but concerns remain that inflation could get stuck above the 2% target.

“Goods price inflation increased, despite lower energy costs,” reads the statement from CTV News. “Services price inflation remained elevated, reflecting strong demand and a tight labor market.”

Rates have been moving all week resulting in Fixed Rates rising slightly due to the increase to the Bond Market. With the recent announcement of GDP trending upwards, which is not the direction we want in order to keep the BoC rates paused. Also, April’s high inflation rates may have caused the BoC to increase the rates. Major central banks are signaling that interest rates may have to rise further to restore price stability.

Some economists were thinking that the BoC will wait until they see May’s employment statistics, which will be released this Friday after the BoC announcement, to make any changes to the rates. Overnight Index Swap markets are currently pricing in a 34% chance of a rate hike this week, but odds rise to 78% for the Bank’s July meeting

Economists from Desjardins similarly noted earlier this week that whether or not the Bank will hike rates this week is “almost a coin flip at this point.”

If you are stressed or struggling to make ends meet, especially with this new rate hike. Please do not hesitate to contact us today to discuss your options. We understand how frustrating this situation can be.

We can look into switching from a Variable rate to a Fixed rate Mortgage, and arrange all things necessary for you and your family.

You can call the office at 604-552-6190, or you can CLICK HERE to book a free mortgage consultation call with Trish.

Trish & The Primex Team

 

Bank of Canada’s April Announcement & What This Means For You.

General Trish Pigott 12 Apr

The Bank Of Canada announced this morning to keep their key overnight rate of 4.5%. As the Bank is still waiting to assess the impact of its previous eight consecutive rate hikes.

Previous Bank of Canada announcement also decided to keep the current interest rate. But It was threatened that it was conditional, making it clear that they will be ready to raise interest rates further if inflation doesn’t come down quickly enough.

Most forecasters expected the Bank to leave its key lending rate at 4.5% this Wednesday morning. Investors seem to agree, with trading on the overnight swaps market indicating less than a 10% chance of a change. But CIBC chief economist Avery Shenfeld says the bank may add cautionary language to its announcement that it could restart its inflation-fighting rate hikes again.

The Bank of Canada says they expect the annual inflation rate to fall to around 2-3% by mid-year. However, the poll suggests that inflation is still running at 5.2%, well over twice the BoC’s 2% target.

In March, the BoC became the first major central bank to stop its aggressive hiking cycle and is currently on a conditional pause. A majority of forecasters in the Reuters poll, 23 out of 31, believe that the rate will remain unchanged for the rest of 2023.

The BoC Deputy Governor Toni Gravelle said the Canadian banking system had a well-earned international reputation for stability, suggesting that policymakers are more focused on inflation and how the economy is performing.

Have questions about today’s announcement? Don’t hesitate to contact us at the office at 604-552-6190. Or you can CLICK HERE to book a quick call to review your mortgage!

Trish & The Primex Team 

Bank of Canada Announcement and What This Means For You.

Latest News Trish Pigott 8 Mar

Earlier this year we expected a .25% increase at the January announcement and saw exactly that. This next rate announcement is expected to not increase or decrease. After 8 consecutive rate hikes over the past year, the Bank of Canada is expected to leave rates unchanged. The Governing Council expects to hold the policy rate at its current level while it assesses the impact of the cumulative interest rate increases.

 

This morning, March 8th, it was announced exactly what was widely expected by economists. They have decided to hold the rate at 4.5% for the first time in a year, while reiterating its wait-and-see approach. The Bank of Canada says it still expects the annual inflation rate to fall to around 2-3% by mid-year.

 

Which leads economists to question what is going to happen after the March announcement.

 

“The U.S. Federal Reserve is probably going to be tightening at least two more times, if not more. For the Bank of Canada, if inflation remains sticky and if the economy does not break down, are they going to be able to sit there with the policy rates they have and pause as they suggested?” said Robert Kavcic, director and senior economist at BMO Capital Markets.

 

Since March of last year, the bank has raised its rate from near- 0% to 4.5%, the highest it’s been since 2007. Making it the fastest rate tightening cycle in its history, in hopes of tamping down on inflation. Although they announced this pause in rate hikes, they stressed it was conditional, making it clear that they will be ready to raise interest rates further if inflation doesn’t come down quickly enough.

 

“They wouldn’t want to announce a pause and then immediately not go through with (it),” said Karyne Charbonneau, CIBC’s executive director of economics.

 

Most recent inflation data suggests that the country is inching closer to normal price growth. Canada’s annual inflation rate slowed to 5.9% in January, down from its peak of 8.1% it reached last summer. With interest rates now at a 16-year high, most economists anticipate a mild recession sometime this year.

 

The market is a little volatile so our advice is that anyone shopping for a home currently, should get a pre-approval to hold today’s rate for up to 120 days. This will allow you to secure today’s rate, and if rates were to drop any further, you will still be eligible for lower interest rates. Don’t hesitate to reach out to us at Primex if you have any questions or concerns regarding your mortgage.

 

Trish & The Primex Team

 

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