CMHC Discontinues FTHBI program & Financial markets anticipate delayed rate cut
No Official Rate Drop... Yet, But...
There is jostling by Lenders to get more "Share of Market" on their mortgage books, resulting in competitive rate trims for mortgage shoppers - aka consumers are beginning to win!
CMHC Discontinues First-Time Homebuyer Incentive program
This program won’t be missed as it was awkward and even confusing. Originally announced in September 2019. The Incentive was not free money, but a form of a shared equity mortgage with the Government of Canada to help with the downpayment. It was repayable using the home’s fair market value at the time of sale, with the government having limited participation in gains or losses.
Financial markets anticipate a late spring – midsummer rate cut
On February 20th, Stats Can surprised economists with the news that our inflation rate had dipped to 2.9%. January’s inflation data was the first time in seven months with headline inflation below 3%. The shelter portion of the inflation calculation continued to accelerate, much of it due to high mortgage rates. Economists point out that if "shelter data" was excluded, annualized inflation would be around 1.5%.
In the U.S. the inflation story isn’t quite as good and the chatter south of the border is that, with February inflation having nudged upward, the expectation for a rate cut has been pushed to Summer.
Few commentators expect the Bank of Canada to wait until the U.S. makes a move as businesses and consumers continue to struggle with high rates. While the BoC held the Key Rate at 5% on March 6th, given the present data, some economists predict that a rate cut may happen as soon as April. However, the general consensus seems to be that rates will begin to trim in early June.
Both Central Banks are focused on managing rate cut expectations so that inflation isn’t re-ignited once interest rates begin to head lower. With data pointing in the right direction, we can hope for a spring surprise!