I’m going to aggregate what I think is key macroeconomic data that is relevant to the Mortgage and Real Estate market here in Canada. I’m doing this to simplify what I see happening in our larger economy in an attempt to provide context on future interest rate movements.
Please consider this summary and my opinion in forming your own thoughts.
Considering the positive economic data, and how the market reacted (Canada Bonds jumped and the Loonie’s increase relative to the US dollar) I think the Bank of Canada is not likely to knee jerk a policy rate hike just yet.
I think there is still more economic data to be analyzed before making a rate hike decision. A 50 basis point hike, in July and September 2017, was simply restoring an emergency rate cut due to the oil shock of 2014. Further rate movements are prudent and cautious. It’s possible by March 2018 the Bank of Canada could increase their overnight rate from 1.00% to 1.25%.
I think employment and wage growth data are the most influencial leading indicators for a Bank of Canada rate hike.
For context, every 25 basis point rate hike increases one’s adjustable Mortgage rate payment by about $12 per $100,000 of Mortgage.
Would you like customized and long-term strategic Mortgage advice? If you're buying, selling, refinancing or renewing your Mortgage I think there are many things to consider, beyond interest rate, before making a decision.
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Thank you for reading!
Cheers,
Chad Moore
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