Back to Blog

After back-to-back interest rates hikes, the Bank of Canada can stay on the sidelines for longer than first anticipated, with tighter mortgage rules slowing the housing market and uncertainty about NAFTA clouding the outlook.

While more rate increases are on the horizon, possibly before the end of the year, the central bank is expected to hold rates at 1 percent on Wednesday as the list of unknowns and a moderating economy force policymakers to watch and wait.

© REUTERS/Chris Wattie/File Photo FILE PHOTO - A sign is pictured outside the Bank of Canada building in Ottawa 

The unknown fate of the North American Free Trade Agreement, a stronger Canadian dollar and yet more housing regulation are conspiring to weigh on consumption and exports, slowing what had been an unexpectedly strong economic spurt early in the year.

Moreover, the Bank of Canada needs to assess how hikes in July and September play out, particularly since new mortgage regulations finalized last week by Canada's banking regulator add to the overall tightening effect on indebted households.

"Really, they're in uncharted territory," said David Madani, senior Canada economist at Capital Economics. "They've never really had to raise interest rates in an environment where housing regulation has been tightening."

The rules from the Office of the Superintendent of Financial Institutions (OSFI) come on top of separate moves by provincial government authorities to cool housing markets in Toronto and Vancouver.

"My philosophy right now is that (housing) rules are the new rates when it comes to housing," said Adam Button, currency analyst at ForexLive.

"Central banks have washed their hands of managing housing market inflation and have passed it onto governments and regulators."

Analysts will comb through Wednesday's policy statement for the bank's outlook on the housing market and how risks around trade policy have increased after an acrimonious end to recent NAFTA talks.

Bank of Canada Governor Stephen Poloz said earlier this month that while there would be a negative shock to the economy if talks collapse, the bank would wait to see what happened before deciding how to react.

Madani said that before the OSFI rules and the deterioration in the NAFTA talks, he had expected another rate hike in December. But he now sees the bank on hold into next year.

Others see a hike sooner, with third-quarter growth on track to match the central bank's 2 percent forecast and inflation ticking up.

"Core inflation is going to keep firming over the next few months just in response to the growth we've had over the last year, so that will support a couple more rate hikes," said Robert Both, macro strategist at TD Securities. He sees a hike in December and one more in March before the bank pauses.

Markets see 47.2 percent odds of a third rate hike in December, while the median forecast in a Reuters poll also predicted another hike before the year is out. [CAD/POLL]

(Reporting by Leah Schnurr in Ottawa; Additional reporting by Fergal Smith in Toronto; Editing by Dan Grebler)

Simon Fraser
Market Update

Simon Fraser Condos

Altaire by Polygon

Altaire built in 2008/2009 reaches higher then any other condo building in Metro Vancouver offering panoramic views.

Novo I by Intergulf

Novo I built in 2007 known for the amazing sight lines and views from most units and balconies up to 1000 sq ft.

Novo II by Intergulf

Novo II built in 2007 known for the amazing sight lines and views from most units and balconies up to 1000 sq ft.

Aurora by Polygon

Aurora built in 2006 with 103 condos featuring 36 unique floor plans ranging from 715 sq ft to 1500 sq ft.

One University by Millennium

One University built in 2005 is UniverCity's flagship building with luxury homes featuring semi private elevators.

Harmony by Polygon

Harmony built in 2005 was the first condo development at Univercity & as a result offers a unique setting & views.

Serenity Townhomes by Polygon

Serenity is a collection of 2 bedroom townhomes of 1100 sq ft ranging to 4 bedroom 2000+ sq ft townhomes.

The Hub by Liberty Homes

The Hub built in 2009 is set atop Nester's Grocery and steps from High Street giving these homes an urban feel.

Verdant by VanCity Enterprises

Verdant is a two storey town home building built with environmental design and stylish living spaces which complement the modern exterior of these SFU homes.

Origin by Porte Development

Origin is designed by GBL Architect & BYU Interior Designs, developed by Porte Development Corp. and marketed by Red Dot Real Estate.

Nest by Mosaic

Located on UniverCity High Street across from the new University Highlands elementary schools this refreshing building will add further depth to a growing community.

Highland House by Liberty Homes

A 12-storey concrete high-rise development and targeted towards Rental Investors and First-Time Condo Buyers.

Lift by Porte Development

Lift will be a wood frame building comprising of 56 homes. Building technologies, environmental features, and price points should be similar to Origin.

Altitude by Hungerford Group

Altitude will be a 2 tower development comprising of a 12 and 14 story building with a total of 210 strata units.

CentreBlock by Liberty Homes

CentreBlock at UniverCity atop Burnaby Mountain is the latest condo project with sales commencing early 2014. .

.page-footer-copyright a { background: url("http://www.hafezrealty.com/_media/POWERED-BY-AGENTID.png") no-repeat center center transparent; padding-top: 10px; }