Try to expand the Bank of Canada mandate
Cheap money is responsible, at least in part, for driving home prices sky high. From 2009 onward, the Bank of Canada kept its crucial overnight interest rate below 2%—an historical low. With a policy rate of 0.25% until recently, interest rates on a five-year variable mortgage were as low as 1.25%. That was incentive enough for most Canadians to purchase properties and greatly increase costs.
The Bank of Canada kept interest rates low to stimulate the economy after a recession in 2009. In recent years, the central bank lowered interest rates to navigate the financial implications of the COVID-19 pandemic. Because its primary focus is to keep inflation low and stable, the Bank’s potential impact on real estate prices—as a result of its own monetary policy—is unpredictable. This means that,…
