The Bank of Canada Keeps the Policy Rate Steady at 4.5% – What Does It Mean for Homebuyers?

Are you in the market for a new home? You may be wondering how the Bank of Canada‘s (BOC) recent decision to keep the policy rates unchanged at 4.5% will affect your home buying journey.

Source: Bank of Canada

It’s no secret that interest rates play a significant role in the housing market. Since the policy rate has not changed, it is crucial for potential homebuyers to know what this means for them.

In this article, we will explore the Bank of Canada’s decision. We’ll also touch on its potential impact on the housing market. Finally, we’ll provide insights and tips for those looking to buy a home in the current economic climate.

Factors Influencing the Bank of Canada’s Policy Decision

The Bank of Canada’s decision to keep the policy rates unchanged at 4.5% is influenced by a variety of factors. Let’s take a closer look three of the key factors.

Inflation Rate

One of the key factors that the BOC considers when setting the policy rate is inflation. If inflation is high, the Bank of Canada may impose rate hikes to slow down economic growth and reduce inflationary pressure. Conversely, if inflation is low, the Bank of Canada may lower interest rates to stimulate economic growth.

Currently, inflation is at 5.9%, which is well above the BOC’s target of 2%. This means that consumer prices are increasing at a faster rate than what is considered healthy for the economy. However, the Bank of Canada predicts that inflation will decrease to 3% by mid-2023 and back down to 2% by 2024.

State of the Economy

The nation’s central bank also takes into account the state of the economy when making its policy rate decision. If the economy is growing rapidly, the bank implements rate hikes to prevent the economy from overheating. Conversely, if the economy is sluggish, the Bank of Canada may lower interest rates to encourage borrowing and spending.

Global Economic Conditions

The Bank of Canada also considers global economic conditions when making its policy rate decision. If there is a global economic downturn, the BOC may lower interest rates to support the Canadian economy. On the other hand, if there is a global economic boom, there may be rate hikes to prevent inflation from rising too quickly.

Implications for Homebuyers

The central bank’s decision to keep the policy rate steady at 4.5% has important implications for those considering purchasing a home. Mortgage rates are likely to remain stable in the near future. Thus, now is a good time to consider buying a home if you can qualify and purchase at the current interest rates.

This is particularly important as the Bank of Canada predicts that inflation will decrease in the coming years. This downturn trend could lead to a decrease in interest rates. If you are able to secure a mortgage at the current rates, you may be in a better position to weather any future rate hikes or cuts and save money in the long run.

When interest rates are stable, homebuyers can consider various housing options to find their ideal home. However, interest rates can vary. So it’s crucial to consider your long-term financial objectives before making significant decisions.

Insights and Tips for Homebuyers in the Current Economic Climate

If you’re looking to buy a home in the current economic climate, it’s important to be aware of the various factors that can influence your decision.

In addition to the central bank’s policy rate, there are many other considerations to keep in mind. Here are some helpful tips to guide you through the current market and prepare you for successful homeownership.

  1. Interest rates are just one of the factors to consider when buying a home. Even if interest rates are stable, you should also think about your long-term financial goals and whether owning a home is right for you.
  2. Be prepared to act quickly when you find a home that you love. Housing demand is high and inventory is low in several markets. To prepare for house hunting, you should get pre-approved for a mortgage and ensure that your financial paperwork is in order.
  3. Be realistic about what you can afford. While it can be tempting to stretch your budget to buy a home in a hot market, unexpected expenses can arise when you own a home. These expenses include repairs and maintenance costs, property taxes, and insurance. It is important to factor these costs into your budget and leave some room for unexpected expenses.
  4. Work with a trusted real estate agent who can provide guidance and support throughout the homebuying process. An experienced agent can help you do the following:
    • navigate the current market conditions
    • provide insights into local neighborhoods
    • negotiate on your behalf to help you secure the home of your dreams at a fair price


Knowing about the Bank of Canada’s decision to maintain the policy rate at 4.5% is vital for potential homebuyers to make informed decisions. Here are the key takeaways to keep in mind:

  • The central bank’s policy rate decision is influenced by inflation, the state of the economy, and global economic conditions.
  • The inflation rate is higher than the Bank of Canada’s target. So, interest rates might remain steady in the near future, making it a good time to think about buying a home.
  • When buying a home, remember that interest rates are only one factor. You should be ready to move quickly once you find the right home.
  • It’s crucial to be realistic about what you can afford. Also, work with a trusted real estate agent who can provide guidance and support throughout the homebuying process.

By keeping these in mind, you can navigate the current economic climate with confidence. You can also make informed decisions about your homebuying journey.

If you’re interested in more information, we’ve included a few links from the Bank of Canada:

Press Release: Bank of Canada maintains policy rate, continues quantitative tightening

Speech Summary: Understanding the reasons for high inflation

Speech Summary: Higher Interest Rates are Working

If you have any queries or are curious about your home’s value due to the recent market growth, we’d be happy to discuss it over a call.

Derek Timmons

Derek Timmons

Derek is a top performing REALTOR® in Airdrie, Alberta, Canada. Aside from knowing the market, he uses his knowledge and experience in construction to help clients understand exactly what they’re in for when buying and selling real estate.


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