If you’re a homeowner in Canada, or soon-to-be homeowner, you’ve probably been keeping a close eye on the Bank of Canada’s actions over the past year. While interest rates were at a historical low in 2020, the Bank of Canada has been steadily increasing rates over the past year in an attempt to combat inflation. The last rate hike, on December 7, 2022, was an increase of 50 basis points to bring the benchmark interest rate to 4.25%. So what does this mean?
Was the latest rate hike predicted?
Prior to the Bank’s announcement, experts widely agreed that the Bank of Canada was going to raise rates again this month, though some predicted a 25 basis point hike instead of 50.
Could this be the end of interest rate hikes?
The interest rate is now the highest it’s been since 2008, and many are wondering if it will go even higher—for would-be home buyers looking at mortgages, all major Canadian lenders have already increased their prime lending rate to 6.45%.
During previous announcements, the Bank of Canada made it known that the rate would continue to climb in coming months—however this time, it appears the bank “will be considering whether the policy interest rate needs to rise further,” which is giving some people hope that the new year will bring a much-needed slowdown.
What’s going to happen in 2023?
The next announcement from the Bank of Canada will take place on January 25, 2023, when it will publish its next full outlook and forecast.