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Available Expert - Bank of Canada increases overnight rate to 0.75 per cent

Wednesday, July 12, 2017

Queen’s University real estate expert John Andrew is available to comment on The Bank of Canada increasing its overnight rate by 0.25 percentage points to 0.75 per cent. Canadians with variable-rate mortgages will immediately feel the increase in the overnight rate.

“Given that this is the Bank of Canada’s first rate increase in close to seven years it is inevitable that it will have a significant impact on real estate markets, primarily through the psychology of buyers, sellers and mortgage-holding homeowners,” says Professor Andrew. “Mortgage rates have been so low for so long that there is a large proportion of home owners in Canada who perceive sub-three percent rates as normal, not the anomaly that they really are when looking more historically.

“With home prices having increased so dramatically in recent years in many markets, homeowners have typically stretched themselves very thin when borrowing, meaning that they are very susceptible to even small increases in mortgage rates. This will impact those with variable rate mortgages immediately, and those with fixed rates when their mortgages renew. If the Bank of Canada makes even one more rate increase in the next few months, it could be enough to trigger a correction in home prices.”

To arrange an interview, please contact communications officer Anne Craig (613-533-2877 or anne.craig@queensu.ca) at Queen’s University News and Media Services Department in Kingston, Ont., Canada.

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