Cielo condos at 300 bloor st w. How will real estate be affected after raising interest rates? The Bank of Canada announced on July 11 that it would raise interest rates by 25 basis points and raise the policy rate to 1.50%, in line with market expectations.Please Visit: Cielo condos at 300 bloor st w to Get Your VVIP Registration Today!
This is also the second time that the Bank of Canada has raised interest rates this year and the fourth time in the current rate hike cycle. The decision statement pointed out that trade protectionism is the biggest threat to the global economy, and the Canadian dollar rose in the short term against the US dollar.
The Bank of Canada announced on Wednesday (July 11) that it would raise interest rates by 25 basis points, raising the policy rate to 1.50%, in line with market expectations. This is also the second time that the Bank of Canada has raised interest rates this year and the fourth time in the current rate hike cycle.
Today’s market situation is complicated. On the one hand, the trade dispute with the United States has not been resolved, and the regulation of the domestic real estate market also requires a lot of energy. The government is “internal and external troubles”.
The real estate market in Toronto and Vancouver, two major cities in Canada, has always been one after another in terms of development trend, and the model is very similar. However, since Canada entered the interest rate hike cycle at the beginning of this year, the situation in the two cities began to be different. The relevant policies in Vancouver were introduced earlier than Toronto, so they are now slightly more affected by policy promotion.
According to the June TREB report, household resale in Toronto rose 2.4% from a year earlier, while Vancouver fell 37.7% for the fifth month in a row, suggesting that Toronto’s market anti-stress policy is stronger. At the same time, month-on-month sales in the two cities began to diverge, with Toronto up 17.6 per cent from the previous month and Vancouver down 2 per cent.
Overall, Toronto and Vancouver are very sensitive to interest rate hikes, and the effect of interest rate hikes on curbing the economy and housing bubbles is now very significant.
After this interest rate hike, what kind of changes will continue to take place in the Canadian real estate market will be seen in the second half of the year. In addition, for the next interest rate increase, it may not come so soon, conservatively estimated that it may be half a year later, that is, the end of the year.
Although the Bank of Canada has raised interest rates, many professionals are not particularly optimistic about the Canadian dollar, although some people believe that the interest rate increase by the Bank of Canada will support the Canadian dollar, and if the free trade agreement is taken into account, it is reasonable that the Canadian dollar is not bullish in the medium to long term.
Rabobank said that the US and Canada are likely to fall, with 1.30 as support, but after the central bank’s decision, the exchange rate is likely to rise and may remain in the 1.32-1.34 range for the rest of the year. However, some institutions said that the central bank chose to raise interest rates to push the Canadian dollar higher, but the upward trend was limited, and instead, it was necessary to consider the possibility of the Canadian dollar falling after raising interest rates by the central bank.
At the same time, the Imperial Bank of Canada identified three major risks to the Canadian dollar:
First, the premium of the North American Free Trade Agreement between Canada and the United States has basically been included in the Canadian dollar, but then the Canadian dollar may face the problem that the United States takes the lead in reducing imports to Canada, although there is no obvious performance in the data. but the risk is far more serious than the market thinks.
Second, financial markets have tightened and central banks have begun to tighten policy, which is not a favorable situation for the Canadian dollar.
Third, domestic mortgage and consumption in Canada show that higher interest rates are a risk factor for household debt and consumption, which is also bad for the Canadian dollar.
Overall, there is no doubt that the Canadian dollar still faces negative risks from the North American Free Trade Agreement, so even if the Bank of Canada raises interest rates, it may not be able to strongly support the Canadian dollar.
The property market is beginning to stabilize, the Canadian economy is close to full capacity, CPI and core inflation remain close to 2 per cent, CPI inflation is expected to rise further to 2.5 per cent, then fall back to 2 per cent in the second half of 2019, wages are expected to rise by nearly 2.3 per cent. Therefore, the purpose of this interest rate hike is to keep inflation near the target and will continue to act gradually in the future, depending on economic data.
The Bank of Canada also released its quarterly monetary policy report (MPR), which expects GDP growth to rise to 2.8 per cent in the second quarter but slow to 1.5 per cent in the third quarter. Canadian business investment is growing, reflecting robust demand growth and capacity pressures, while exports have been boosted by strong global demand and higher commodity prices, but household spending is expected to be overstocked by higher interest rates and tighter new mortgage policies.
The bank expects the global economy to grow by about 3% in 2018 and 3.5% in 2019, in line with MPR’s statistics in April. Among them, the US economy is stronger, strengthening expectations of higher US policy interest rates and pushing up the dollar, putting financial pressure on some emerging market economies. Despite the rise in oil prices, the Canadian dollar fell, mainly reflecting the strength of the US dollar and market concerns about trade actions.