Is Your Mortgage Rate Going To Go Up?

By Grant T. Smith


mortgageLast week, on 5 December, the Bank of Canada delivered the news that they were not adjusting interest rates. This leaves the bank rate unchanged at 1.75%.


The bank has slowly been raising rates for more than a year, from 0.5% 18 months ago, through five raises, to the current rate of 1.75%.


In leaving the rate unchanged this month the Bank of Canada pointed to three key components:

  • The drain on global economies, which is arising from emerging trade conflicts,
  • The sharp decline in oil prices, which reflects geo-political developments,
  • The lack of ability to get Canadian oil products to global markets, which reflects the current transport issues in Canada.


The expectation is still that our economy will continue to grow and that we may see further increases in the overnight rate as early as January. It would appear that the Bank is comfortable with the stabilization in the housing market following recent slowdowns, especially here in BC. The impact of tighter borrowing restrictions and the increasing rates are key components in the housing slowdown.


The Bank of Canada uses this interest rate as their key tool in moderating inflation. Potential rate adjustments are made to try to achieve the target inflation rate of 2%.


Why should you care about this? Because, yes, current mortgage rates are expected to see moderate increases in 2019 – this will make owning a house more expensive. Some of the lending requirements being put on us by the banks seem punitive, but as rates rise, we as home owners, need to be aware of the effects of rising rates.