BoC interest rate hike will have a 'dramatic effect' on Canadians, especially homeowners: economist

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The Bank of Canada’s aggressive one per cent rate increase on Wednesday caught many by surprise and will likely have a considerable financial impact for many Canadians, says one economist.

“It’s going to have an immediate, pretty dramatic effect on a lot of people’s borrowing costs,” Stephen Brown, senior Canada economist at Capital Economics, told CTV’s Your Morning on Thursday.Most economists had expected an already-hefty 75 basis point move. However, the jump to 2.5 per cent from 1.5 per cent is the largest single increase by the central bank since 1998 and the fourth hike this year. Yet the bank has made it clear it’s not done.

There are already concerns that soaring interest rates could drive the country into a recession, but most economists have said the bank has few other options to quickly tame soaring inflation. One sector seeing a significant impact from the rate hikes is the housing market. Average housing prices have already fallen dramatically since April and the Canadian Housing and Mortgage Corporation is expecting the market to decline 3.5 per cent overall, with some forecasters predicting a steeper plunge of up to 20 per cent.“[It’s] in part a reflection of just how incredible the gains were over the past year,” Brown said.

”I just think given the rise in mortgage rates that we’re seeing, further upward pressure on interest rates, it’s very likely we’re going to see further falls in house prices,” Brown said. Shehata said it is too late to consider reselling because he cannot guarantee he will be able to sell the condo for the price he paid. On the other hand, he says his friends have seen their rent increase dramatically as well.

 

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The budget will balance itself

Yet corporations are more profitable than ever. 💰 Why are big businesses still highly profitable when Canadians are suffering ? They are trying to create a larger divide between the very rich and middle class. 💸

The government is going to insight a recession, and you will own nothing and be happy.

TRANSLATION;The plan is working .

Ok CTV Will you now admit that Justinflation is real and it will hurt a lot of Canadians? Remember when there were a lot of MP’s criticizing the Trudeau Liberals for reckless spending which was creating massive deficits? That these deficits would fuel higher inflation?

The increased interest rate will have the opposite effect. If we want to see true change in Canada we need to get rid of Trudeau and his party of useless tools

Why are we not talking about the elevated prices at the grocery stores? Have you not seen their profits? Double digits!! Do you know how many stores MAKE this amount? 2% over a thousand stores? Think about it. Ergo: inflation is being inflated..by them.

Houses will remain overpriced. Inflation may calm but prices won’t decline. Gas will stay 40% higher than it should be. But hey, the banks will make more money, so… always a silver lining.

They are lucky to have had such great interest rates for so many years.

I just got a call from clients to list. Young couple 3 years in their 1st home. Just had a 2nd baby so Mom is at home. Variable mortgage- first hikes increased their payments by $200/mth this one brings it up a total of $400/mth and they can't afford to stay in their home.

Awful mismanagement of our economy. Shuttering business for two years backfiring. Mortgage on new condo purchase went up $300.00 a month since March while it also depreciated in value. He’s stuck. Also has concerns of inflation on food and utilities. Trudeau’s Canada.

JustinTrudeau spending $400 billion in one year is having a dramatic effect on Canadians today. When governments throw money from helicopters it causes inflation.

And tenants as the landlords will share their increased cost of interest rates

FFS, it is still less than 3%. It used to be 7% historically. Incredible

Anyway real estate is super overpriced currently. It needs correction asap

Q: What Does It Mean to Be Knowledgeable About Your Finances? If you have conducted your due diligence to answer the question, then you are not bothered by the interest rates. 🫶

Empty houses and full parks.

You will own nothing and eat bugs says CTV's masters.

You don't mean 'homeowners' you mean people living in bank owned homes!!

Yep

Homeowners with a large mortgage

🤣😂

What would happen to Canadian economy without the bank hike?

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