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Douglas Porter

Douglas Porter

Chief Economist at BMO

September 6th, 2017

Bank of Montreal chief economist Doug Porter said Wednesday's rate increase by the Bank of Canada will add further pressure on the weakening real estate market in Toronto, although much of the 0.25 per cent increase has already been anticipated and factored into long-term mortgage rates.

"I think it would just further dampen the market and probably push out the recovery," he said Wednesday.

Mr. Porter said a new increase coming so soon after July's rate increase "accentuates" the Bank of Canada's urgency to raise rates, which will leave many anticipating there could be yet another move later this year.

"So I wouldn't brush it off -- I think that will put a bit more upward pressure on some of the medium and longer-term mortgage rates as well, and of course the variable rates will move almost instantaneously," he said.

Keep in mind that every interest rate hike affects at least 20% of every fixed-rate mortgage per year. People who think they're safe because they locked in 5 years ago, could most handle the accumulation of rate hikes now? Play it smart and think ahead.

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