Economic growth in Canada from residential real estate investments will go negative in 2019, according to the Bank of Canada (BOC), which has conceded that stiff new mortgage regulations, local housing restrictions and rising interest rates have had a larger and more negative impact than expected.
Consumer spending and housing investment “have been weaker than expected” as housing markets adjust to “to municipal and provincial measures, changes to mortgage guidelines and higher interest rates,” according to a BOC statement.
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“Staff analysis suggest that the combined effect of tighter mortgage guidelines and higher interest rates has been larger than previouslyestimated,” the BOC noted in its January statement.
The BOC left the overnight benchmark policy rate at 1.75% in its January 9 setting.