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The Bank of Canada key interest rate has gone up again, for the third time in the past six months. On January 17, 2018, Canadians learned the BOC interest rate is increasing another quarter of a percent, going up to 1.25%. This is the highest the key interest rate has been in Canada in nine years.

“Recent data have been strong, inflation is close to target, and the economy is operating roughly at capacity,” the Bank of Canada said in a press release.

The Bank of Canada key interest rate was first raised in July of 2017, and again in September of 2017. BOC interest rates stayed flat in October and December, and early predictions from experts thought they would stay flat again during the first few months of 2018. However, those predictions began to change as certain economic activity came to light.

The global economy is strengthening, consumption and residential investment have “been stronger than anticipated,” and business investments remain strong, according to the Bank of Canada.

The one item “clouding the economic outlook,” according to BOC, is the uncertainty regarding the future of the North American Free Trade Agreement.

While it’s early yet to say when the next interest rate increase will come, BOC indicated in its press release that more hikes are on the horizon for 2018, saying “the economic outlook is expected to warrant higher interest rates over time.”

BOC also said it would remain cautious and guided by incoming data.

Two wild cards that could affect Canada’s economic outlook have been introduced this January as well. Canada’s new mortgage rules came into effect January 1, 2018. And significant minimum wage increases were implemented in Ontario and Alberta, and there could be more coming for other provinces.

The only mention BOC made of the new mortgage rules was to say that looking forward household spending and investing is likely to have less of an effect on the economy, given higher interest rates and “new mortgage guidelines.”

What does this mean for mortgage professionals? As we’ve stated before, those with variable-rate mortgages will be hit hardest by the increase. It will also affect clients who are up for mortgage renewal. Certain factors, such as the gross debt services ratio and total debt services ratio will be more important than ever, especially as the new mortgage rules encourage relying less on the loan-to-value ratio.

The next BOC interest rate announcement is scheduled for March 7.

Purview can help you navigate Bank of Canada key interest rate changes and more. On-demand, fully automated property valuation and fraud detection tools help you stay one step ahead of the completion. Learn more at, or by calling 1-855-787-8439.