2 October 2018

It’s important to understand that a higher overnight rate makes lenders raise their mortgage rates, which could be bad news for Canadian homeowners, and the entire real estate market. Those potential buyers who worry about too high mortgage payments, may be less likely to enter the market in the nearest future. Today, Canada’s debt-to-income ratio is already at 169.1%, which is one of the highest numbers in the world.

According to CIBC economists Avery Shenfeld and Katherine Judge, in case the housing market starts struggling with the rate hikes, it’s unknown whether business investment will be enough to support the economy.

“We don’t agree with the BoC, when it sometimes underlines the ability of trade and related business investment to replace real estate as a source of growth when interest rates go up,” – they said.

The Bank’s next rate meeting will be on October 24.