Although talks of recession are certainly loaded with doom and gloom, downcast conditions could tempt the BoC to hold rates at 5% until mid-2024.The Canadian economy is on the cusp of a mild recession, with downturned conditions expected to bleed into 2024. Accordingly, prices are on track to slip an additional 10% by early next year.
MPC and Oxford forecast that the bank will opt to hold its benchmark rate at 5% until mid-2024 — which will keep average mortgage rates at 6.1% for the remainder of 2023 — before “gradually easing rates to a neutral level” by early 2027.With the cost of borrowing at a remarkable high level, housing completions “will remain under pressure” in the year to come, says Wednesday's report.
“Looking ahead, we expect housing completions to fall significantly by 21% next year. The recovery will then be 5.7% gradual with modest growth in 2025 and a much bigger jump in 2026.”, which are on track to “witness one of the slowest growth rates in a decade across all Canadian regions” for the remainder of 2023.
“Quebec is projected to experience the most significant decline in housing starts, followed by the Atlantic provinces and the Prairies,” says the report. “Over the rest of the decade, we forecast housing starts to exceed historical levels in the Atlantic Provinces, Prairies, and Ontario, while the other Canadian regions will continue to experience a downturn in growth.”
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