After a flurry of activity in the early days of the pandemic, things have been relatively quiet for the Bank of Canada, at least when it comes to moves that would impact the country’s mortgage market.
The central bank’s series of rapid cuts to its influential overnight rate in March 2020 helped send mortgage rates to rock-bottom levels through much of the last year. Even as rates begin to rise again, these initial cuts have been regarded as a major driver of Canada’s eye-popping, and still very much booming, housing recovery.
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But aside from some commentary on the country’s red-hot market and a modest change in guidance as to when to expect a rate hike, the Bank of Canada hasn’t made many housing market-impacting moves since it played a leading role in last summer’s monumental recovery.
Anyone looking for a change in the Bank’s regularly scheduled policy announcements this week would have been disappointed. As it has done in every announcement since April 2020, the Bank left its overnight rate unchanged at a record-low 0.25 percent.
This was the expectation of economists watching the central bank’s moves. A rate hike isn’t anticipated until at least the second half of 2022, though this is sooner than the Bank had indicated earlier in the pandemic, when it appeared to favour a 2023 date for its first hike.
“While leaving policy variables unchanged as expected, the Bank of Canada’s core message is that they continue to set a high bar against being blown off course as the economy transitions away from the waning third wave of COVID-19 cases,” wrote Scotiabank Head of Capital Markets Economics Derek Holt.
While raising rates is arguably the quickest way to cool the country’s red-hot housing market, Bank of Canada Governor Tiff Macklem and his team have committed to keeping the rate extremely low to support Canada’s still precarious economic recovery.
Following the Bank’s last announcement in April, commentary from mortgage rate comparison site Ratehub.ca said that the Bank could move up its timeline even earlier if the economy continues to improve faster than expected.
Recent Canadian economic data has been weak thanks to third-wave lockdowns, but the Bank said it was expecting a strong rebound driven by consumer spending through the summer as restrictions loosen and vaccinations continue to accelerate.