What’s worse, the new mortgage rules or higher rates?

Well the good news is that the Bank of Canada (BoC) held their overnight rate steady at their latest rate announcement Wednesday, keeping Prime at 3.45% for most lenders (TD is at 3.60%).

While the decision to hold the overnight rate at 1.25 per cent wasn’t unexpected, the concern over growing trade protectionism, as a justification, was. Not only have exports fallen, but the housing market is weaker than late 2017.

It seems the pending rules pushed many to purchase before the rules took affect on January 1, 2018, with January and February sales off sharply. Will the slowdown last?

Well, it’s anyone’s guess but the BoC is watching the housing market closely, stating “It will take some time to fully assess the impact of these [rules] on housing demand and prices. The bank continues to monitor the economy’s sensitivity to higher interest rates.”

Their didn’t seem to be too much urgency, on the part of the central bank, for further, imminent rate hikes. We are currently expecting hikes in July and October, depending on how the trade issues unfold in the months ahead.

As for Calgary’s low sales, many believe this is a direct result of the new rules and CREB’s recent monthly stats caution all of us to prepare for a bumpy road ahead.

Some say the cold and unusually snowy winter is having more of an affect than the new rules. What are your thoughts? What are you hearing from clients?