Home sales set for stronger 6 months, rates to rise

The impact of the B-20 mortgage guidelines, especially the stress tests, have made a significant impact on Canada’s housing sales; but that may be about to change.

In a newly-published outlook for mortgage rates and the housing market, the chief economist of the British Columbia Real Estate Association says there’s a good chance things will start to improve soon.

“If the impact of the stress test evolves in a similar fashion to past macroprudential tightening, we expect that home sales and the wider Canadian economy will rebound in the second half of the year,” says Cameron Muir.

He adds that the outlook for the economy is 2.3% growth in GDP in 2018 and 2% in 2019 with inflation slightly above 2%.

What about mortgage rates?
The Bank of Canada is likely to continue to increase interest rates as the economy grows due to inflation at or near its target of 2%.

Mortgage rates are therefore likely to increase in the next year with the BoC expected to want to move the base rate from the current 1.25% to preferred long-run levels of 3-3.5%.

The outlook for mortgage rates is a 1-year posted rate of 3.80% by the end of 2018, rising to 4.64% a year later. The 5-year qualifying rate is forecast to reach 5.54% by the end of 2018, rising to 5.70% a year later; the 5-year discount rate’s forecast is 3.64% by the end of this year and 3.84% by the end of 2019.

Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate

Market update:

Get help choosing the best mortgage rate

Just fill in a few details, and we'll arrange for a Mortgage adviser to help you find the best mortgage for your needs

  • How soon do you want a mortgage?
  • Name
  • Where do you live?
  • Phone number
  • E-mail address

Industry news

Submit a press release

Poll

Do you invest in commercial properties?