The Canadian economy is showing some signs of improving in the first quarter after registering less than 0.5 per cent growth in the final quarter of 2018. However, the drag from lower Alberta oil production and the ongoing negative impact of the mortgage stress test means that Canadian economic growth will likely be modest, in a range of 1-1.5 per cent this year. That places any further tightening this year by the Bank of Canada in doubt, though a recent uptick in inflation has quieted talk of a rate cut. As we forecast a month ago, 5-year fixed rates have fallen further with most Banks now offering borrowers a 3.24 per cent rate, a level we expect to prevail for much of 2019.
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