Summary by West Shore Voice News [updated Oct 29, 2018]
Wednesday, October 24 ~ NATIONAL. The benchmark interest rate was raised by the Bank of Canada by one-quarter-point to 1.75% on Wednesday October 24. That’s the fifth time the central bank has lifted rates since mid-2017.
And interest rates for mortgages and lines of credit are set for a further upward climb. Bank of Canada Senior Deputy Governor Carolyn Wilkins said that the strategy is about “returning the policy rate to a neutral stance” with an interest rate goal of 2.5% to 3.5% to match inflation. Therefore several more rate increases are coming.
Wilkins said the economy is operating “near capacity”, with “inflation close to our target”. She said that increases in air fares (underpinned by higher fuel costs) caught the bank’s attention.
She said the bank sees how people are “adapting to higher interest rates and changes to mortgage underwriting guidelines”, and that “households are adjusting budgets largely as expected, though we realize it is difficult for those who are highly indebted.”
Employment and incomes are continuing to grow, according to the bank. “The quality of new debt is improving,” said Wilkins. She added that housing activity is seen to be moderating “to a more sustainable level” and that the economy is more resilient, “which reduces painful outcomes down the road”.
Wilkins inferred that under good economic conditions people should not be struggling with debt, which may indicate a lack of real awareness of post-recession economic conditions for the self-employed and small business owners, and for many folks with low-wage jobs or who are without home equity.
Bank of Canada Governor Stephen Poloz seemed pleased that the mortgage ‘stress test’ (which commenced January 1, 2018) and interest rate increases (2017-2018) are having what he calls a positive impact on housing affordability. Meanwhile, those ‘on the edge’ (buying and selling entry level homes) are frequently taking an economic hit and being held back.
This week Conservative Leader Andrew Scheer said a survey shows 94.9% of respondents (party supporters) feel they are ‘not better off now’ than in 2015.