Why interest rates won’t rise

by Olivia D'Orazio08 May 2015
Homebuyers and investors have yet another reason to rejoice: one more economist has suggested that the Bank of Canada is unlikely in increase interest rates.
Speaking at RealtorQuest in Toronto this week, Warren Jestin, the chief economist for Scotiabank, said Canada’s central bank likely won’t raise interest rates, possibly until the end of next year.
Jestin pointed to several reasons behind his forecast, each of which he said led to the Bank of Canada’s concern for the economy, which, in turn, is keeping rates low.
The first concern is the low value of oil. Jestin said Canada’s economy is traditionally dependent on commodities, so the oil shock most certainly impacted the national market.
Jestin also said the low Canadian dollar, which is very closely tied to the energy industry, is also a source of concern for the Bank of Canada. The loonie has since rebounded from a low in the 77-cent range, thanks largely to some recovery in the energy market.
Employment, too, particularly among first-time buyers, remains low, though not entirely absent.
“First-time buyers are in the market,” Jestin said, “but they’re not as aggressive as they were.”
Still, even if the BoC were to increase rates, Jestin said he doesn’t expect that to cause the real estate market to crash.
“Interest rates are not an impediment to real estate,” he said, echoing the sentiment that many in the industry have already pointed to.
In Toronto, agent Justin Kua said people are forced to buy and sell their homes for a variety of reasons and, for that subsection of buyers and sellers, interest rates do not play a role in that decision.
“When it comes to lifestyle changes, you’re paying one way or another,” he said. “It comes down to your aggression in being able to pay down the mortgage in the first five to 10 years.”

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

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


Do you invest in commercial properties?