Surrey Mayor Brenda Locke has asked city staff to “substantially” reduce the time it takes to process development applications to decrease carrying costs, in anticipation of the Bank of Canada hiking the key interest rate to five per cent on July 12.
“We are all aware of the hardship caused by the interest rates both for our citizens as well as businesses,” Locke said at July 10’s council meeting.
“I’m reminded that the carrying costs due to the high interest rates have now become an ever-increasing factor that is impeding the goals by all levels of government to achieve the goals set for affordable housing. The City of Surrey is pivotal to this region to provide the kind of housing needed to fill the demand required.”
Locke also asked staff to work towards further streamlining building permit applications to “support efficiencies to bring housing stock to market” and asked the senior management team to come up with ways to support the development of housing – especially affordable housing.
“All developers play a critical role in Surrey’s economic development. Surrey has the ability to be leaders in our region in addressing housing demand and with this challenge time is of the essence,” Locke said.
Coun. Mandeep Nagra agreed with the mayor.
“We need to expedite these type of projects because we are in a huge shortage of housing so we need to look into things so we can expedite and brings these projects forward not within years, or two year, within months so we can have more housing,” Nagra said.
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On July 12, the Bank of Canada set the bank rate at 5.25 per cent and deposit rate at five per cent.
“Global financial conditions have tightened, with bond yields up in North America and Europe as major central banks signal further interest rate increases may be needed to combat inflation,” a bulletin from the BoC states.
Its Monetary Policy Report for July projects that inflation will stay at about three per cent over the next year and return to the two per cent target by the middle of 2025. The Bank of Canada is expected on Sept. 26 to announce the next overnight rate target and publish its next full outlook for the economy and inflation, including risks to the projection, on Oct. 25.
James Laird, Co-CEO of Ratehub.ca and president of CanWise mortgage lender, noted in a press release that the BoC’s position that it will take until 2025 to achieve its two per cent inflation target “is longer than previously forecasted.
“The Bank did not attempt to predict whether more rate hikes will be necessary,” Laird stated.
On mortgage rates and housing, he said, variable-rate holders and people with a balance on a home equity line of credit “will be disappointed to see their rates continue to rise.
“Those who have a variable-rate mortgage without a fixed payment will see their payment increase immediately. Those who have a variable-rate mortgage with a fixed payment will see their amortization increase, unless they choose to increase their payment or are forced to increase their payment because they have hit their trigger point.”
Laird advises people with a fixed-rate mortgage to budget for current market rates at their next renewal date.
“Households should plan ahead to determine where the money is going to come from to make higher mortgage payments.”
“If your mortgage is up for renewal within the next year, it’s a good idea to hold a rate with a new lender now. If rates jump up further in the future, it should make sense to break your existing mortgage and switch to that new lender before your rate hold expires to lock-in the lower rate,” Laird said.
“Anyone who will struggle to make their mortgage payments now or at their next renewal should reach out to their lender to discuss options that are available to them before they fall behind on their mortgage payments,” he added.
“This hike will put downward pressure on home prices and cause transactions to slow over the summer.”
tom.zytaruk@surreynowleader.com
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