Mortgage interest costs see biggest growth since 2009

Mortgage interest costs see biggest growth since 2009

Mortgage interest costs see biggest growth since 2009

Latest data from Statistics Canada showed that mortgage interest costs increased by 2.8% in March, representing the biggest rise since April 2009.

The StatsCan report also showed Canadian inflation growing at its fastest pace in more than 3 years in March, though gains were slower than forecast. Inflation averaged 2.1% in the first quarter, the highest since Q3 2014.

The consumer price index climbed 2.3% from a year earlier, the most since October 2014, StatsCan said late last week. That lagged the consensus forecast of 2.4%, and the monthly increase of 0.3% also trailed expectations.

The agency also reported retail sales rose 0.4% in February, matching forecasts, but excluding autos, retail sales were flat, missing the consensus for 0.4%.

Services prices rose 2.7% in March, the fastest since September 2011, and goods increased 1.8%.

Read more: Canada’s median home price rises 6.2% in Q1 2018

The report is a key benchmark for the Bank of Canada, which held its key borrowing rate unchanged at 1.25% Wednesday last week. Governor Stephen Poloz is expected to increase the rate twice more this year, depending how inflation behaves in an economy operating close to full output.

“The deluge of data released today in Canada generally under-performed consensus expectations, but not by enough to alter the overall outlook for the economy,” CIBC World Markets economist Royce Mendes wrote in a research note on Friday (April 20). “The underwhelming readings on prices will delay calls for an acceleration in Bank of Canada rate hikes.”

The central bank lifted its first quarter inflation estimates last week to 2.1%, from 1.7%, and the 2018 prediction to 2.3% from 2%. The Bank of Canada targets inflation at 2%.

 

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