Photo: James Bombales

They did it.

For seven years the Bank of Canada hasn’t hiked its mortgage-market-influencing overnight rate — until today.

This morning the central bank announced it was setting the overnight rate at 0.75 per cent, an increase of 25 basis points.

“Canada’s economy has been robust, fuelled by household spending. As a result, a significant amount of economic slack has been observed,” reads a statement from the bank on the hike.

Twice in 2015 the Bank of Canada had trimmed the overnight rate by 25 basis points to combat the effects plunging oil prices were having on the economy.

Since then, the central bank has kept the rate steady at a historically low 0.5 per cent.

But now “the adjustment to lower oil prices is largely complete,” adds the central bank in a statement.

The hike was largely expected. Before the announcement, all of Canada’s Big Six banks had already predicted a hike due to factors such as recent comments from Bank of Canada Governor Stephen Poloz and recent labour market strength.

While rising rates mean higher borrowing costs for those with mortgages, Lauren Haw, CEO of Zoocasa, a real estate website and brokerage, suggests the housing market can handle it.

“The increased benchmark interest rate of 0.25 should not have an adverse effect on the housing market, as we are still in a very inexpensive lending period,”

“Mortgage rates remain at historical lows since the decrease seen after the 2008-2009 recession and it will take a series of increased rate hikes before we see a significant impact on homebuyers in Canada,” she adds.

Some observers suggest the bank is not done yet and that another increase is due before the end of the year.

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