Jul 13, 2022
By Steve Kee
It is going to cost more to borrow money or get a mortgage in Canada.
As expected, the Bank of Canada raised its key interest rate by a full percentage point , marking the largest single hike since August 1998.
The central bank’s decision signals a more aggressive approach to reigning in skyrocketing inflation, which reached a 39-year-high of 7.7 per cent in May.
The Bank of Canada said inflation in Canada is “largely the result of international factors,” but that “domestic demand pressures are becoming more prominent.”
The Bank of Canada is forecasting inflation will peak at eight per cent this year before it begins to decline.
While the higher interest rates are expected to help reduce inflation on the domestic front, it could affect home prices.
Real estate brokerage Royal LePage is still predicting house prices will rise in 2022 but has cut its forecast for growth this year and is now predicting prices will rise just five per cent.
Earlier this year they had estimated a 15 percent jump in prices.