As was widely anticipated, the Bank of Canada today raised it's key benchmark interest rate by 1/4 point. That means their interest rate went from 0.25% to 0.50%. This is the first of what is expected to be several interest rate increases over the coming year or two. The interest rate is being increased to combat rising inflation, as the COVID-19 pandemic appears to be receding (for now anyway).
The major implication of a Bank of Canada interest rate increase is that variable rate mortgages are tied to this rate. So, variable rate mortgages generally increase in lockstep with Bank of Canada rate increases. Even so, variable rate mortgages, today, still offer a steep discount over fixed rate mortgages. However, it may be that this advantage will be eroding over the next year or two.
Overall, I don't expect such a tiny rate increase to have have any material impact on the housing market, anytime soon. A lack of homes for sale in Fraser Valley housing markets like Surrey, Langley and Abbotsford, combined with high demand, still means a strong seller's market will likely remain intact. I don't expect any of the Fraser Valley or Metro Vancouver housing market conditions to change materially, in the near term.
Mortgage rates are still incredibly low, in an historical context. They are still a tailwind behind demand for homes in North Delta through to Mission and even out towards Chilliwack still.