NEST NEWS AT A GLANCE
BANK OF CANADA SUMMARY
The Bank of Canada (BoC) recently released their third announcement for 2021, sharing their latest updates on bond yields, quantitative easing, and interest rates. This update is especially important with respect to rate predictions and how rates may impact new homeowners and businesses.
As anticipated, the BoC will maintain the effective “lower bound” until inflation targets are met. The biggest news is the Bank now suggests an increases to rates sooner than expected. Rather than 2023 and beyond, Canadians should expect to see an increase “sometime in the second half of 2022”. Prospective homebuyers and existing mortgage holders should prepare for a modest increase in rates later next year. In addition, OSFI recently proposed revisions to the stress test, a tightening of the qualification requirements across most lenders, which will take effect June 1st this year.
The BoC also proposes plans to taper asset purchases [Quantitative Easing Program] by April 28th, 2021. This program has been instrumental bringing stability to the marketplace during the pandemic, and the Bank will maintain its commitment to keep bond yields (and rates) low throughout the next 18 months.
Lastly, macro variables can shift, and so can predictions by the BoC. Results from Q1 were stronger than anticipated, yet full economic recovery will take time and evolve in tandem with COVID-19. The Bank will keep a close eye on all variables effecting the economy and the hot housing market:
“Housing construction and resales are at historic highs, driven by the desire for more living space, low mortgage rates, and limited supply. The Bank will continue to monitor the potential risks associated with the rapid rise in house prices.”
If you have any questions regarding the latest announcement from the Bank of Canada, or would like to secure a mortgage before the proposed changes June 1st, get in touch with our team at Nest Mortgage!