Surprise, Surprise: No Rate Hike From Bank of Canada

For months we’ve been warned by “experts” that rates are sure to shoot up. That the Bank of Canada will change their tune based on the state of the economy. That by year’s end, we’ll be well on our way to pre-pandemic rates that will make anyone with a variable rate mortgage regret ever buying a home.

It’s December. None of that has happened.

Two days ago, the Bank of Canada met for the last time in 2021 and decided to maintain their benchmark rate. All of the noise you’ve been hearing about the risk of homeownership and inviability of variable rate mortgages ended up being exactly that: noise. So many trusted voices predicted a reckoning by the end of 2021. And yet, 2021 is almost over. Zero of the eight annual Bank of Canada meetings resulted in a rate increase.

To be clear, I’m not saying that rates will remain as is for the next two years. Inflation will continue to rise and the economy will continue to grow. Rates this low can’t stay this low forever. It’s just common sense. 

What I am saying is that you don’t need to give into fear. When it comes to your home and finances, pragmatism and patience will outbeat fear ten times out of ten. The toxic stories you see and hear are often works of fiction. Don’t get me wrong, it’s completely natural to theorize – especially given the uncertainty of the economy and how the Bank of Canada will react to it.

But theories are theories. Facts are facts. And the fact is, right now you can get a variable rate at 1.50%. Even if rates increase at every Bank of Canada meeting in 2022, which is highly unlikely, the cost of your total loan over time will still likely be lower than if you get a fixed rate mortgage. It’s a great time to buy a house in Canada, even if you may have heard otherwise. 

Your best interest is my only interest. I reply to all questions and I welcome your comments. Like this article? Share with a friend.

Steve Garganis: 416-224-0114; steve@canadamortgagenews.ca