Adding another 1.25% to today’s mortgage rates - not an unlikely scenario.

The Organisation for Economic Co-operation and Development (OECD), a global policy think tank, released a report that estimates the Bank of Canada will raise overnight rates as high as 4.5% in 2023 in order to tame inflation. With the war in Ukraine and climate change, there is increasing pressure on food and energy prices to go up. Almost all OECD countries have low unemployment rates as the labour markets remain tight.

Central banks around the world are raising rates higher than expected in order to prevent inflation expectations from becoming entrenched. The OECD expects inflation in Canada to be around 6.9% for the remainder of 2022 and down to 4.5% in 2023.

As investors, we know it is impossible to predict the future. The Bank of Canada themselves are closely watching indicators and inflation measures to determine its next moves. It is prudent for investors to look at their real estate portfolios to see the impact of a potential 1.25% increase and batten down the hatches in preparation for what is to come.