As we predicted in June, the Bank of Canada announced last week that they’re raising their overnight rate to 1.50%, up 1/4 of a percentage point from the previous 1.25% and the highest it’s been in almost a decade.

The Bank predicts that the global economy will grow by 3.75% this year and 3.5% next year. As well, the US economy itself is performing better than expected, “reinforcing market expectations of higher policy rates and pushing up the US dollar.” Plus oil is up.

The Canadian economy seems generally positive, with the following notable highlights from the first half of 2018:

  • Household spending is down a bit in response to higher interest rates and tighter mortgage guidelines
  • Housing markets are stabilizing after a slow start to the year
  • Strong global demand and higher commodity prices are strengthening Canadian exports
  • Business investment is up

As a result, the Bank of Canada predicts an average growth rate of 2% over the 2.5 years.

So what does this mean for you? Well, now would probably be a good time to lock in your rates.

According to Benjamin Reitzes, Canadian rates and macro strategist, BMO Capital Markets:

“The BoC is in no rush to continue pushing rates higher given the uncertainties surrounding trade, lingering concerns about housing and household debt, and renewed belief that there’s some labour market slack. . . . If the data evolve decently over the next few months, our call for the next hike to come in October is very reasonable, but that’s a big if given the trade concerns. ”

With a predicted rate increase this month and a possible but tenuous raise in October, borrowing costs will likely rise as well. This is particularly true for variable mortgages, but will also affect new fixed mortgage rates.

If you’re thinking of purchasing a new home soon, have an existing mortgage that is coming up for renewal, or want to switch from a variable mortgage to a fixed one, contact us today. We can discuss your situation and find a solution that takes advantage of current rates while ensuring you get in (or stay in, for that matter) a home you love without having to pay more than you need to.