The Bank of Canada this week raised the benchmark interest rate by a full percentage point, to 2.5 percent. It’s the largest single increase to the rate since 1998, and the fourth since March as the central bank seeks to counter runaway inflation. Economist Peter Norman of Altus Group (seen here addressing the 2021 Hardlines Conference) says he expects to see a “softening through this year” in the reno market. The sector “has been holding up so far” but “traditionally … has been fairly interest rate-sensitive due to the amount of borrowing,” for example from lines of credit.
At the same time, Norman adds, cooling home sales could motivate some homeowners to consider renovations as an alternative to moving. In addition, “some potential renovating homeowners have been waiting for availability of contractors and possibly lower prices before they pull the trigger. Those segments may be active later this year.”
(We’ll have full coverage of the Bank of Canada’s bombshell in next week’s eye-watering edition of our weekly Hardlines newsletter! If you’re not getting the weekly Hardlines newsletter, we’ll make it easy for you to try it out. Click here for four free weeks on us!)
