IN THE NEWS | BANK OF CANADA ANNOUNCEMENT DEC. 6, 2023 Today the Bank of Canada announced that the Policy Rate will remain at 5%. For the third consecutive meeting, the Bank of Canada has left its key lending rate unchanged at 5.00%. This follows 10 previous rate increases over 12 rate announcements, which has raised the overnight target rate by 4.75% since March 2022.
In its statement, the Bank said that while high interest rates have restrained consumer spending and that economic growth stalled in the third quarter, it is “still concerned about risks to the outlook for inflation and remains prepared to raise the policy rate further if needed.”
The Bank added it wants to see “further and sustained easing in core inflation.”
There is no denying the real estate market has slowed down considerably in the Greater Vancouver and Fraser Valley neighborhoods. Buyers have taken to the sidelines to get a better sense of where they think the market is going. Higher interest rates have diminished buying power and homes are on the market now for 60 days which compared to previous markets, feels like eternity. However, some homes have actually sold in a couple days and may even have had multiple offers. Those are generally the unique homes that have something special to offer like a large White Rock Rancher. Even still, in the midst of this slower market there is also this sense that there is an undercurrent or something brewing just below the surface. And while things may be tight for those who maxed out on their purchase at the peak of the market, one thing still remains - DEMAND. People still need a roof over their head and buyers are coming to terms with the new reality of higher borrowing costs. As long as there is no further rate increases, I think we are going to see a surge in sales in very early Spring. The ball is in the Bank of Canada’s court!
Even if you have owned a home in the past, but for the purpose of opening an FIRST HOME SAVINGS ACCOUNT (FHSA) you will be considered to be a first-time home buyer if you did not, at any time in the current calendar year before the account is opened or at any time in the preceding four calendar years, live in a qualifying home (or what would be a qualifying home if located in Canada) as your principal place of residence that either:
you owned or jointly owned
your spouse or common-law partner (at the time the account is opened) owned or jointly owned
This means you can take advantage of this federal program and contribute $8000 per year up to $40,000 into the TFSA tax-free. Parents helping with the purchase should encourage their children to open an account (Only the children will get the tax savings)
When should I open an FHSA account? Open your FHSA account before December 31st. Even if you only deposit $1 today, by setting up the account before the year end, this will allow you to contribute a maximum of $16,00 the following year - TAX FREE!