In this morning’s scheduled rate announcement from the Bank of Canada, they confirmed that they will be holding their overnight rate at 0.25%. This was not surprising, and anything else would have been quite the shocker. The overnight rate is what mortgage lenders use to set their prime rate, which remains at 2.45%. The BOC is not expecting to make any rate changes until the second half of 2022, which is in line with their previous prediction.

The Canadian economy continues to grow. While the lockdowns have had some economic impact, they will soon be behind us, which paves the way for the economy to thrive. New COVID infections are dropping rapidly. With more Canadians being vaccinated, consumer confidence continues to grow, and our economy will continue to rebound. I think we have all had enough of this pandemic, and are ready to resume normal activity. At least, the new normal.

Is Inflation A Concern?
Given the amount of stimulus the government has pumped into the economy, inflation remains a concern. There are some predicting that increasing inflation will result in rates increasing faster than originally expected. The Bank of Canada expects inflation to remain near 3% throughout the summer, however they expect it to ease later in the year. While there are factors supporting higher than expected inflation, large consumer debt levels should keep inflation in check. I would not expect to see inflation run out of control anytime soon. For this reason, mortgage rates can be expected to remain low.

The Housing Market
The housing market has started to slow. This doesn’t mean that its reversing. It’s still crazy out there. Just not as crazy as it was over the last few months. Multiple offers are still the norm, and it remains challenging to have an offer accepted. The housing market will eventually correct. It’s a matter of how much. It’s possible that the effects of a correction could be minimal due to pent up immigration demands. Time will tell of course.