The Bank of Canada held its overnight rate at a record low 0.25% on Wednesday, but warned multiple increases would be coming soon. The U.S. Federal Reserve separately also said it would start hiking soon.
Forecasts are mixed for 2022, with the Royal Bank of Canada seeing home prices up 3% this year and brokerage Royal LePage forecasting a 10.5% gain. Right now, a typical Toronto area home may have 15 buyers putting in offers. A hike would have cut that by a third, said mortgage broker Ron Butler. Instead, all those bidders will be ready with their best offer for another five weeks, he said.
The Bank of Canada acknowledged low interest rates play a role in home-price escalation, along with increased investor interest, but suggested the solution was outside their policy mandate.