“New mortgage rules should reduce the BoC’s fear that a rate cut would fuel a more worrisome housing bubble, and might raise concerns that a slowing in home building will eat into growth,” CIBC Capital Markets chief economist Avery Shenfeld told the Financial Post.
In addition, consumers and industry players can expect Governor Stephen Poloz to adopt a “dovish tone” in the Bank’s interest rate announcement and monetary policy report, both expected today.
“[This will] at least open the door a crack to a rate cut, if necessary,” Shenfeld wrote in a missive to investors.
“[The] risk for the policy outlook remains tilted toward a cut, but the bar remains high for such a move.” BMO Capital Markets senior economist Benjamin Reitzes agreed.
In the wake of the new rules, Reitzes predicted that in the succeeding months, the central bank will keep an eagle-eyed stare on exports, housing data, and the effects of the fiscal stimulus—factors which he deemed “the keys for policy through at least mid-2017.”
Just weeks after their announcement, the stricter lending rules have already made themselves felt in Vancouver, which experienced significant drops in home prices and sales volume.
However, the Toronto market remained robust, with a prominent developer and real estate broker stating that the city’s stable fundamentals would make it resistant to any potential price corrections and sales declines brought about by the new rules.
“It's really not the end of the world,” Brad Lamb said. ““The market here is so well supported with employment.”
MBN
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