RENNIE OUTLOOK 2022
INTEREST RATES
The Bank of Canada’s policy interest rate has now been at its effective lower bound of 0.25% since early in 2020, despite increasing calls for the Bank to raise its trend-setting rate to combat high consumer price inflation. These increases will come, and sooner than later (likelybeginning inMarch). Thiswill have the effect of directly increasing the carrying costs of debt in the form of lines of credit (including HELOCs) and variable rate mortgages. As the economy continues to strengthen, bond yields are also projected to increase in part to offset expected future inflation, and in part because of Bank of Canada will soon begin freeing bonds from its balance sheet—both of which will impact fixed mortgage rates.
OUR 2022 OUTLOOK The Bank of Canada has signalled its intention to raise the overnight lending rate in 2022. This upcoming tightening phase could see the target rate rise back to its pre-pandemic level of 1.75%, with associated increases trickling into 2023. Additionally, bond yields will continue to rise, pushing up fixed mortgage rates by up to 0.75%.
INTEREST RATES
Copyright © 2022 rennie group of companies. All rights reserved. This material may not be reproduced or distributed, in whole or in part, without the prior written permission of the rennie group of companies. Current as of February 3, 2022. All data from Real Estate Board of Greater Vancouver and Fraser Valley & Rennie. While the information and data contained herein has been obtained from sources deemed reliable, accuracy cannot be guaranteed. rennie group of companies does not assume responsibility or liability for any inaccuracies. The recipient of the information should take steps as the recipient may deem necessary to verify the information prior to placing any reliance upon the information. The information contained within this report should not be used as an opinion of value, such opinions should and can be obtained from a rennie and associates advisor. All information is subject to change and any property may be withdrawn from the market at any time without notice or obligation to the recipient from rennie group of 9
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