Rate Update – What is happing with Mortgage rates in Vancouver and BC?

Rate UpdateAs a Vancouver Realtor® one of the questions people love to ask me is “What are rates doing?” “What is going to happen with rates?” “I know you can’t tell the future but what do you think is going to happen over the next year?” Well, one of my best sources for learning about rates and what they are going to do is listening to economists. They British Columbia Real Estate Association (BCREA) provide information on economic news relevant to rates. Here is what they had to say around the Bank of Canada Interest Rate Decision – September 4, 2013

The Bank of Canada announced this morning that it is maintaining its target for the overnight rate at 1 per cent. In its accompanying statement, the Bank highlighted that an uncertain global economy is delaying an expected rotation of growth in Canada toward exports and investment. This means that the burden of economic growth will remain on households at a time when most households are deleveraging and looking to slow consumption. All of this adds up to a Canadian economy that will grow below trend in 2013, likely at a rate of around 1.5 per cent.  Below trend growth will translate to continued subdued inflation, which the Bank anticipates will return slowly to its 2 per cent target in 2014. As for the Bank’s tightening bias, language around the withdrawal of monetary stimulus has been significantly moderated. The Bank anticipates a gradual normalization of policy interest rates as conditions for inflation, growth and household debt normalize.
Rising long-term Canadian interest rates, along with somewhat soft economic growth through the first half of 2013, have taken some urgency out of future monetary policy tightening. In particular, higher long-term rates will further slow growth in household debt via higher mortgage and other key lending rates which will allow the Bank to push increases in its overnight out to late 2014 or early 2015.

Source BCREA: Copyright British Columbia Real Estate Association. Reprinted with permission. BCREA makes no guarantees as to the accuracy or completeness of this information.

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