The Canadian Real Estate Association issued the following announcement on.

In line with financial market expectations, the Bank of Canada announced on May 30, 2018 it was keeping its trend-setting overnight lending rate unchanged at 1.25%.

The economy continues to unfold largely as expected. Inflation is close to the 2% target, a little higher than the Bank had projected back in April. That said, the Bank attributes most of that to the bump in gas prices in recent weeks and said that, as usual, it will look past the transitory impact of gas price fluctuations.

The Bank noted that “housing resale activity has remained soft into the second quarter, as the housing market continues to adjust to new mortgage guidelines and higher borrowing rates.”; however, in line with CREA’s forecast for home sales, the Bank also expects activity to start to pick back up later this year in line with solid underlying fundamentals.

The Bank reiterated that higher rates are still on the way, with financial markets betting the next 25 basis point hike will be at the next scheduled policy announcement on July 11.

That said, the Bank also reiterated that it will be taking a gradual approach to future hikes, given that the economy is likely more sensitive to interest rate movements now than it was in the past. Should business investment improve further as the Bank hopes, the associated increase in the economic potential of the country could also require fewer rate hikes to keep inflation on target.

As of May 30, the benchmark five-year lending rate was 5.34%,[CS1] where it has been since it was bumped by 20 basis on May 9. Prior to its recent increase it had been steady at 5.14% since January. It is also now 70 basis points above where it was at the end of May last year. As of January 1, 2018, all mortgage applicants must qualify for financing based on no less than the benchmark five-year lending rate.

Canada’s major chartered banks advertise five-year fixed mortgage interest rates ranging from 3.74% to 5.59%. Homebuyers may negotiate a rate below lenders’ advertised rates depending on their creditworthiness and the degree to which they do other banking business with the mortgage lender.

The next interest rate announcement will be on July 11, 2018. It will be accompanied by The Monetary Policy Report, which updates the Bank’s economic forecast.

Original source: https://www.crea.ca/news/bank-of-canada-keeps-rates-on-hold-in-may-next-hike-likely-coming-in-july/