{"id":215825,"date":"2021-04-21T16:48:25","date_gmt":"2021-04-21T20:48:25","guid":{"rendered":"https:\/\/www.livabl.com\/articles\/?p=215825"},"modified":"2021-04-21T16:48:25","modified_gmt":"2021-04-21T20:48:25","slug":"higher-mortgage-rates-coming-sooner-canadian-economy","status":"publish","type":"post","link":"https:\/\/www.livabl.com\/articles\/archives\/higher-mortgage-rates-coming-sooner-canadian-economy","title":{"rendered":"Higher mortgage rates coming \u201csooner than expected\u201d as Canadian economy recovers"},"content":{"rendered":"

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\"bank-of-canada-interest-rate\"<\/a>Photo: James Bombales<\/em><\/p>\n

While the country is mired in a destructive third wave of COVID-19 infections, Canada\u2019s economic outlook is growing brighter by the day.<\/p>\n

This, of course, is great news as we progress toward a full post-pandemic recovery, but homebuyers should take heed that mortgage rate hikes are on the horizon and may be arriving faster than previously expected as the economy rebounds.<\/p>\n\n

In one of its regularly scheduled announcements, the Bank of Canada said today that it would leave its mortgage market-influencing overnight rate at the current ultra-low level of 0.25 percent for the time being.<\/p>\n

Not too long ago, the central bank appeared committed<\/a> to keeping the rate at the current level until 2023 to support the economic recovery. This stance was maintained even as buyers scooped up record numbers of properties and prices soared in Canada\u2019s housing market, with low mortgage rates being a major driver of this activity.<\/p>\n

In today\u2019s announcement, the bank changed its tune, revising its growth forecast upward and stating that it now anticipates the economic conditions to begin raising rates will be met in the second half of 2022. This doesn\u2019t guarantee that rates will remain in place until then, but it\u2019s a noteworthy shift in tone for the bank.<\/p>\n

\u201cIf good news continues across all parts of the economy, it is possible the Bank will move up their timeline even further. Therefore, Canadians should brace for higher mortgage rates sooner than expected,\u201d wrote mortgage rate comparison site Ratehub.ca in an email today following the bank\u2019s announcement.<\/p>\n

\u201cThe announcement is bad news for anyone who currently has a variable rate mortgage as they should now be prepared for prime to move sooner than expected. The positive outlook also means that fixed rates should continue to drift up throughout the remainder of 2021,\u201d Ratehub.ca continued.<\/p>\n

Economists analyzing the bank\u2019s announcement today were quick to point out that despite the upbeat outlook, uncertainty around the pandemic persists.<\/p>\n

\u201cThe Bank of Canada will be watching vaccine and virus developments closely,\u201d wrote TD Senior Economist Sri Thanabalasingam.<\/p>\n

\u201cThe speed of the economic recovery is dependent on vaccines winning the race against COVID-19 and its variants. This is the key downside risk in the Bank’s projection and bad news on this front could see the Bank delay its plans for when monetary policy will normalize,\u201d he added.<\/p>\n

<\/div>\n","protected":false},"excerpt":{"rendered":"

While the country is mired in a destructive third wave of COVID-19 infections, Canada\u2019s economic outlook is growing brighter by the 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