Dear Clients, Friends and Neighbours,

The Bank of Canada met early this week for their 1st meeting of 2023. 

The purpose of this meeting is to advise about the policy interest rate known as the overnight lending rate and to summarize the current state of our economy.  The overnight lending rate correlates directly with Prime Rate which affects any variable-rate or adjustable-rate mortgages, home equity lines of credit (HELOC) and/or any other financial products based off Prime.

The BoC has raised their rate by 0.25% so Prime Rate is expected to follow with an increase of 0.25%.  Bank Prime Rate is currently 6.45% so this change will increase it to 6.70%.

While this is another increase – the 8th in a row since last March – it is only 0.25% and the language in the announcement gives some hope that this may be the last:

The Bank’s ongoing program of quantitative tightening is complementing the restrictive stance of the policy rate. If economic developments evolve broadly in line with the MPR outlook, Governing Council expects to hold the policy rate at its current level while it assesses the impact of the cumulative interest rate increases

So what the heck does that mean?

In 2022 we saw home sale prices peak in March, coming off the momentum of record-breaking sales in 2021. Due largely to the rate increases noted above the housing market has been contracting in sales (and pricing) ever since. If interest rates were to remain on an upward trajectory, we could expect housing activity to remain well below historic averages but, based on the above statement from the BoC and the pent up need to buy or sell a home, we expect housing sales to trend upward in the coming months.

How is this possible?

Inflation is expected to come down significantly this year and If the Canadian economy finds itself in a recession it will likely come at a time when the housing market has already hit a low point. The housing market tends to lead business cycles so if this historical pattern holds true the onset of a recession could coincide with the start of a housing market recovery.  Like soon.


Totally possible. We know from history home sales post strong recoveries in the year that follows a recession as the economy heals and stable or falling interest rates unlock demand.  Although a legitimate economic recovery will be predicated on a decline in fixed mortgage rates, realtors are already starting to see a slight uptick in housing demand.

If real estate has taught us anything over the last few years its that we must be prepared to adapt and adjust to uncertainty.  Variables like interest rates, governmental regulation or global supply chains are hard to predict.

In comes us.

If you have been thinking about selling your home this year, you are going to want someone with street level intelligence to provide a detailed analysis for you.  Someone who can help you see the bigger picture while crafting a low stress sales plan for your family.

This is what we do!

Jenn & Colin