Prices continued to rise in Canada in January, but at a slower pace than in previous months. Meanwhile, the annual inflation rate fell from 6.3% in December to 5.9% in January, according to Statistics Canada. In Quebec, it is 6.2% in January.
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Real estate owners, if you were wondering if the rise in interest rates had the expected impact, the answer is yes. However, there is a downside: mortgage renewals could lead to drastic increases in monthly payments and the real estate value of properties sometimes suffers the consequences.
“People are going to have increases of 500 to 1500 dollars per month and we are already seeing that there are drops in real estate value, so we can see the concrete impact on family budgets, analyzes Antoine Chaume, financial planner and adviser in wealth management at ASSANTE capital, Tuesday, at TVA Nouvelles.
“We think 2023 will be quite difficult and it’s important to take the time to look at your expenses and find solutions.”
We must therefore expect a further rise in interest rates, which creates pressure on homeowner families.
“There may still be one or two increases by the end of the year, warns the finance expert. There is likely to be a fairly rapid turnaround thereafter, towards the end of 2023 or the beginning of 2024.”
Finally, the “historic rates at 2% of the central bank” could stabilize at around 3% from 2025″, according to Antoine Chaume, who quotes the forecasts of economists.
The Bank of Canada has informed that it is monitoring the evolution of inflation in order to decide whether it will proceed with further increases in the indicator rate.
In Quebec, food and gasoline are the main factors of the inflation rate at 6.2%. As for mortgages, the current climate does not lead us to believe that interest rates will go down.
“We have never seen a drop in interest rates when inflation is above the real rate. As long as inflation is not under control (…), we must see a certain balance before seeing rates start to fall again, ”explains Antoine Chaume.
In terms of consumption, at groceries and restaurants, prices rose 10.4% in the countries, faster than in December.
“We see that the places that most affect Quebecers and Canadians are those where there is still a lot of inflation. We are talking in particular about housing, food and gas. It is sure and certain that [les ralentissements] are good news, but we haven’t left the inn.”
