Anticipating Wednesday’s rate hike by the Bank of Canada, all of Canada’s Big Six banks had already raised their listed five-year mortgage rates by 15 basis points to 5.14 per cent, and that is going to make it all the more difficult for home buyers to qualify for mortgages, particularly with the new stricter guidelines.
The Central Bank confirmed on Wednesday that the cost of money is going up, citing stronger employment and GDP growth in 2017, as well as increased activity in residential investment and consumption by consumers.
However, with the new higher interest rates and stricter mortgage guidelines, residential home sales may tend to slow going forward.
The Bank does not see rates rising again anytime soon, that is unless there are more positive surprises, which is not likely. This could steady out the mortgage markets as home buyers get used to the new higher rates and stringent rules.
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