The slow rate of inflation — despite Statistics Canada recording a slight rise this past February — means the Bank of Canada will likely hold off on raising interest rates, the Canadian Press reports. Statistics Canada figures indicated an 8.1 percent increase in mortgage interest costs and a 14.3 percent hike in the cost of fresh vegetables that was offset by lower energy prices. This resulted in a slight hike in the consumer price index of 1.5 percent from February, 2018. Core inflation has held steady at two percent since last August.
In real estate, national home sales dropped sharply from January to February 2019, the Canadian Real Estate Association (CREA) reported this past March. In February, national homes sales dropped 9.1 percent while the number of newly listed homes fell 3.2 percent. The national average sale price fell by 5.2 percent.
Apartment units recorded a year-over-year price increase of 2.4 percent in February, with townhouse and row unit prices rising one percent.
In British Columbia, Alberta as well as Newfoundland and Labrador, sales were more than 20 percent below their 10-year average for the month, CREA reported. “Only time will tell whether successive changes to mortgage regulations went too far, since the impact of policy decisions becomes apparent only well after the fact,” Gregory Klump, CREA’s chief economist, stated in a news release.
In the recent past, Ottawa has set minimum down payment levels, introduced mortgage stress tests and capped loan terms to cool the market.
Although households won’t see the same increase in borrowings costs this year that were seen in 2018, they will make higher debt payments than in the past when interest rates were even lower, reports Canadian Press. ◊