Steady holding of the Bank of Canada’s overnight lending rate elicits differing responses from mortgage brokers associations in Ontario and British Columbia. Bank of Canada Governor Tiff Macklem has confirmed the rate will rest at 2.25 per cent, where it has been pegged since last November, as Canada’s central bankers endeavour to keep inflation close to the 2 per cent target rate.
In announcing the monetary policy earlier today, he weighed Canada’s pickup in economic growth during the second quarter against elevated oil and gas prices and uncertainty tied to U.S. tariffs and Canadian countermeasures. Among the positives, he cited the broad base of Q2 economic growth, resilience in consumer spending, increased exports and investment spending and “some rebound in housing activity” after several weak quarters. Still, central bankers are cautious that extended conflict in the Middle East could push up oil and gas prices for the long term, and that added costs flowing out of the Canada-U.S. trade dispute will seep into consumer prices.
“Monetary policy cannot offset the effects of tariffs or influence global energy prices. What we can do is ensure global developments don’t jeopardize price stability in Canada,” Macklem said.
The Canadian Mortgage Brokers Association (CMBA) of Ontario calls this stance a “steady signal”, but CMBA British Columbia alternatively maintains that it “does not signal the stability nor economic conditions” that will lure first-time homebuyers into the market. CMBA BC president, Tricia McIntosh, argues lower interest rates would provide meaningful relief for British Columbians grappling with affordability. CMBA Ontario president, Michelle Campbell, counters that the steady rate is “prudent and necessary” and suggests such stability demonstrates that this is a good time to invest.
Meanwhile, the organization’s national platform is straddling both camps. “Although a hold can be reassuring, it fails to address one of the key barriers preventing homeownership in Canada — and that is the elevated cost of interest on mortgage,” says John Woods, president of the Canadian Mortgage Brokers Association.
