Historically the Bank of Canada (BoC) avoids changing monetary policy during elections to stay nonpartisan, he said at CRE’s Investor Forum, on March 25 and 26. So he advises anyone with a variable rate mortgage to “keep floating.”
“[The BoC will] stand back and let the politicians do their thing and then come back in and take over the economy once the mess has been all cleaned up,” he said.
Kinch does recommend, however, that investors increase their mortgage payments to build up more equity and to provide a buffer when rates inevitably go up later this year.
As for the BoC’s July announcement, Kinch said an interest rate hike at that point is unlikely too because real estate activity is slower during the summer months.
If the BoC were to raise its key lending rate, it would reduce real estate demand 5% more than what is normally expected.
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