TNG Capital Financial

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The Bank of Canada held the overnight interest rate at five per cent on Oct. 25

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The Bank of Canada announced today its sixth interest rate decision of 2023, maintaining the overnight
rate at 5.00%.

After sharp increases in 2022, a pause and two extra rounds of recent increases, the Bank has paused
again.
According to updated forecasts, the Bank expects inflation to hit the 2% target in mid-2025.

The original expectation was 2024.

The Bank's main tool to control prices (inflation) is to increase the cost of borrowing for the economy.
This is inflationary as businesses pass on their increased costs to consumers.

When you fight fire with fire, there is a chance that things will keep on burning. In this analogy, the
Continued burning would be entrenched in inflation, which the Bank has been trying to avoid.

After so many rounds of increases and moving targets, I am skeptical that inflation still needs to be entrenched.

As usual, however, The Bank remains resolute in its commitment to restoring price stability for Canadians.
We can all rest assured.

The next Bank of Canada decision date is on October 25th.
Impact on Mortgages

The Bank of Canada's scheduled announcements have an immediate impact on variable and adjustable rate
mortgages, so this time, there will be no change to borrowers under these loans.

Fixed-rate mortgages, however, are priced based on the yield of Government Bonds of a corresponding
length. In other words, the 2-year bond affects the 2-year fixed rate, and the 5-year bond affects the 5-
year fixed rate.

As the bond markets change daily, fixed-rate mortgages can change anytime, and they have
continued their upward trend over the past few months.

That said, the fact that the overnight rate was maintained sends a signal that affects pricing for longer-
term borrowing, and hopefully, we will see more stability in fixed-rate mortgages.

Impact on Real Estate

Higher rates continue to reduce purchase power and buyers' appetite, with fewer bidders showing up at
listings (in general).

Because of this, prices have generally stabilized in the Greater Vancouver area as there are lower
competition amongst buyers for the limited supply.

I hope this was useful, and, as always, for any financing questions, feedback, or to say hi, feel free to
Write back or call (604) 240-0020

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