Although Canadians have seen record-low interest rates during the pandemic, the B.C. Real Estate Association said it expects the average five-year fixed rates to return to pre-COVID levels by the quarter four of 2022.
The association said their forecast is based on the Bank of Canada’s timetable for tightening monetary policy. The bank announced Wednesday (Dec. 8) that it will hold firm on its overnight interest rate of 0.25 per cent.
In a statement, the central bank also said it doesn’t expect to raise the trendsetting rate until some time between April and September next year, which is unchanged from its previous guidance.
The BCREA said that two rate increases – the first expected in mid-2022 – from the central bank next year would bring the overnight rate to 0.75 per cent, implying a variable rate of two per cent and a fixed rate of three per cent. The group also cited the bank’s ending of its earlier quantitative easing, which is the buying up of billions of dollars in federal government bonds to keep interest rates low.
Now, the bank has halted purchases of new bonds, except to replace existing holdings that mature.
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