As expected, the Calgary market continues its slow recovery. There is more inventory, more sales and the benchmark price is rising both month over month and compared to 2016 numbers.

In some areas, prices for the detached market are up to pre-recession levels. The apartment sector, however, is still struggling with weak sales and increasing supply.

There is a lot of chatter this week about the Bank of Canada raising the overnight rate in it’s next rate announcement next week. While its common to hear an increase in noise, this time its different.

Despite inflation remaining low, the Bank of Canada Governor, Stephen Poloz, indicated last week that he has to look at other indicators in the models that predict inflation.

Eight times a year, the central bank meets to assess the latest economic indicators and decide whether Canada’s economy needs “a shot in the arm from a rate cut, or a pump of the brakes by way of a hike” – a great analogy from Pete Evans at CBC News.

Despite all the noise, analysts say there is still only a 60% chance of a rate increase on July 12th. If the BoC does raise the key lending rate, it will be the first increase since September 2010.

If the BoC does raise the overnight rate, what does that mean for Mortgage holders? Well, the overnight rate only has a direct impact on Prime which applies to Variable terms. We would expect a 25-point hike to 0.75% for the overnight rate. This would man that Prime would likely increase to either 2.85% or 2.95%.

The last two decreases by the central bank were not fully reflected in the discount off Prime. The BoC decreased rates by 0.25% but the banks only decreased prime by 0.15%. If/when rates do increase, will the banks do the reverse, or will the hike be steeper for homeowners?

If you are in the market for a Fixed Rate term, you can expect rates in the 2.44% to 3.14% range, for a 5-year, depending on their possession date and down payment.

If you’re in the market for a Variable Rate term, expect discounts in the range of 0.35% to 0.75% off Prime – Prime for most lenders is currently 2.70%, putting current rates at 1.95% to 2.35%, at least for this week.