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Canada's December Interest Rate Decision and the Real Estate Market

Jeremy Taylor

Here is an update on the Bank of Canada's latest rate decision. This December, the bank has opted to keep its rate at 0.5%. This was a widely expected decision; in fact, the Bank of Canada governor had already stated publicly that the rates would remain unchanged unless there was a significant shock to the Canadian economy. Nevertheless, these unchanged rates remain a big indicator of what is to come for the Canadian real estate market.

The Future of the Canadian Economy Remains Uncertain

The Bank of Canada tends to keep rates low when the economy is struggling. While growth in the second half of 2016 was a little better than expected, there are still some significant weaknesses in our overall economy that need to be addressed. Oil, trade, and global uncertainties have made it difficult to predict how well Canada will fair economically in the coming year. Both the United States election -- with the new President Elect Donald Trump -- and the Brexit crisis in Europe may have an impact on economic performance in 2017. To protect against economic woes, the governor has decided to keep the rates at an exceptionally low 0.5%.

Low Interest Rates and the Canadian Real Estate Market

But though the low interest rates may show some economic uncertainly, it's very good news for the real estate market. Rates are still at historic lows with no real signs of rate increases in the near future. It's very likely that we will be looking at a prolonged period of low interest rates, which makes it easier for Canadian home buyers to purchase more property with the funding that they have. This is likely to continue unless there are some major changes in the Canadian economy, which no one is expecting. 
From a real estate perspective, low rates continue to fuel the housing market across the GTA. These rates will most likely not last forever,  so it's critically important to get into the market as soon as possible.

The next rate announcement will be coming in the new year. This was the final rate announcement for 2016. Though this rate decision was expected, it still spells out a positive atmosphere for the Canadian real estate market moving into 2017.