Interest Rates In Canada

interest rates

Interest Rates Are Moving:

The Bank of Canada raised its target for the overnight rate by 50bps. Interest rates went to 1% on April 13th 2022, matching market expectations. 

It is the second consecutive rate hike and the biggest in 20 years. The interest rates are pushing borrowing costs to the highest in 2 years – since the coronavirus pandemic started. 

.50% might not appear to be a big deal, but trust us when we tell you, if you owe money any increase in your borrowing rates is a big deal. 

What Comes Next:

A few things are stated to happen. The first – the central bank also announced it will end reinvestment and will begin quantitative tightening effective April 25th. 

Canada’s key interest rate could go up another half percentage point in June to help wrestle inflation under control. This means your borrowing rate will be up 1%. 

Inflation is too high! It is higher than anyone expected. First there was the pandemic, then there was the supply chain issues and ships getting stuck. Now, there is a war in Ukraine. All of these are compounding factors on inflation. It appears now that inflation is going to last longer than was previously thought.

Three weeks ago the central bank raised its key interest rate a half point to one per cent and warned more rate hikes would be coming as it works toward an inflation target of two percent.

What Should I Expect:

Policymakers are suggesting interest rates will need to rise further as the economy moves into excess demand and inflation persists well above target. 

Inflation in Canada is now seen averaging 6% in the first half of 2022, up from 5% forecasted in January and to remain well above the 2% target throughout the year.

What Should I do:

If you can lock into a low rate. We suggest you do that! If you are on a variable rate, move to a fixed rate. And last but not least, if you are pre-approved for a home it would be wise to close as soon as you can. Interest rates and qualifying for a mortgage at a different rate might limit the amount you can borrow for a home. 

As always, if you need help buying or selling a home do not hesitate to reach out to Gregg or Ryan Bamford. 


Buying or Selling a Home?

Whatever your buying or selling needs or wants may be, we are available to sit down and work through a plan that works best for you and your family. Contact us to get started.