In an unprecedented step, B.C. Premier David Eby has sent a letter to the Bank of Canada asking for the regulator to avoid an interest rate hike next month.
In writing directly to Governor Tiff Macklen, Eby said another rate hike would hurt mortgage holders with expired or soon-to-expire policies.
“People in B.C. are already hurting. In your role as Governor, I urge you to consider the full human impact of rate increases and not further increase rates at this time,” Eby writes.
“On the ground in our province interest rate hikes are causing more and more people to report they could not afford to cover an unexpected $500 expense and who are moving from financial security into financial insecurity.”
The Bank of Canada’s primary mandate is to address inflationary concerns in the country.
The current key lending rate of 5.0 per cent is the highest it has been in Canada in 22 years.
The target rate was at 0.5 per cent on March 2, 2022 and has been increasing steadily over the past 18 months.
In his letter, Eby also raised concerns about the impact the rates will have on home building and current housing prices.
An increase in rates will impact the lines of credit used by builders to finance new housing construction and new private rental housing construction, meaning homes will cost more to purchase down the road.
“This quiet but devastating impact of rate increases will result in even higher housing costs, feeding inflation further,” Eby writes.
Central1 Credit Union chief economist Bryan Yu told Global News he does not expect the Bank of Canada to increase the lending rate next week.
Yu said housing starts are up this year in Vancouver, but a lot of that is based on past decision-making. The expectation is the rate increases will cool future housing starts.
“When it comes to the letter itself, there are a lot of policies which are long term, while the interest rate hike is short term,” Yu said.
“We have to remember the Bank of Canada has a singular mandate, which is inflation.”
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