{"id":18600,"date":"2021-09-08T13:22:50","date_gmt":"2021-09-08T17:22:50","guid":{"rendered":"https:\/\/www.zoocasa.com\/blog\/?p=18600"},"modified":"2021-09-08T13:29:37","modified_gmt":"2021-09-08T17:29:37","slug":"bank-of-canada-september-2021","status":"publish","type":"post","link":"https:\/\/www.zoocasa.com\/blog\/bank-of-canada-september-2021\/","title":{"rendered":"Low Mortgage Rates to Stay as Bank of Canada Holds Status Quo in September"},"content":{"rendered":"\n

The record-low mortgage rates that have underpinned the Canadian housing market during the course of the pandemic will remain the norm for the foreseeable future, as the Bank of Canada (BoC)  opted to leave their trend-setting interest rate untouched in September.<\/p>\n\n\n\n

In the central bank\u2019s announcement<\/a>, the BoC indicated the rate will stay at 0.25%, where it has sat since March 2020, as part of its strategy to support the economy during the COVID-19 pandemic. It also revealed no further change to its quantitative easing efforts, and will continue to spend $2 billion weekly in order to prop up the government bond market.<\/p>\n\n\n\n

Check out Today\u2019s Lowest Mortgage Rates<\/a><\/strong><\/p>\n\n\n\n

A COVID-19 4th Wave Poses Economic Risk<\/h2>\n\n\n\n

While the summer has been strong for  economic growth, enough pandemic-induced risk remains to warrant low interest rates for longer; the BoC points out that while global economic growth recovered through Q2 and into Q3, many industries remain plagued by supply chain disruptions, which are driving up prices and holding up activity for everything from auto manufacturing to retail. As well, a fourth wave of COVID-19 remains a threat in many regions, as governments may be forced to implement lockdown measures again in the fall or winter.<\/p>\n\n\n\n

As a result, the Canadian economy has contracted by 1%, a weaker performance than the BoC expected in July. An overall slower summer housing market has also pulled down spending, though business investment, government spending, and consumption remain strong. The job market also continues to improve, particularly in sectors that couldn’t operate during lockdown, or could not easily implement social distancing measures.<\/p>\n\n\n\n

Low Rates to Remain Until the End of 2022, Says BoC<\/h2>\n\n\n\n

All of these factors have led the BoC\u2019s Governing Council to conclude that the central bank needs to continue its \u201cextraordinary monetary policy support\u201d and forecasts this will be the case until the second half of 2022, when its typical 2% inflation target can be \u201csustainably achieved\u201d.

Currently, the inflation rate sits at 3%, which would normally be cause for the bank to increase rates. As has been the case over the last year and a half, however, it is eschewing this benchmark as it deems low interest rates to be necessary to support ongoing economic recovery.<\/p>\n\n\n\n

What Does This Mean for my Mortgage Rate?<\/h2>\n\n\n\n

As the BoC is holding the status quo this month, it\u2019s likely there will be very little change for today\u2019s mortgage rates in the near future. Those who are currently in a mortgage term with a variable rate won\u2019t see any change to their monthly payments or percentage of principal paid each month. Those shopping for a new mortgage, or are looking to refinance or break their existing mortgage, will also benefit from today\u2019s deeply discounted rates well into next year.<\/p>\n\n\n\n

How Will This Impact the Housing Market?<\/h2>\n\n\n\n

While ongoing record-low mortgage rates are an important part of Canada\u2019s economic recovery strategy, they have also been a contributing factor to the unprecedented price growth experienced in the housing market. In fact, according to a recent survey conducted by Zoocasa<\/a>, 80% of Canadians feel low rates are driving up the price of homes, and 77% agree they\u2019ve pushed housing costs in small towns and suburban markets to unsustainable levels.<\/p>\n\n\n\n

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