Will Mortgage Rates Rise Before 2017?
The Bank of Canada announced yesterday that it was holding the benchmark interest rate steady at 0.5%. With the Ministry of Finance introducing new mortgage tightening measures to help cool the housing markets, aimed primarily at Vancouver and Toronto, the Bank of Canada believes it can continue its monetary policy of ultra-low rates to control inflation, stimulate other sectors of the economy, and spur our Canadian export market. Given the reduced growth outlook for the economy, it’s possible that the Bank may cut rates to 0.25% at its next announcement on December 7th.
The Central bank has predicted throughout 2016 that it expects oil prices and the Canadian dollar to stay close to the $49 US for a barrel of crude (currently at $51.78), and 77 cents US for the Canadian dollar (currently at 76 cents). Low interest rates help keep the Canadian dollar low which in turn aids our export market, although global demand for our products has stalled. Several events have undermined markets and consumer confidence – European Union members are in a debt crisis, there is U.S. fiscal deficit consolidation, a global oil-price collapse, and Brexit fallout.
Interest rates will likely stay low in Canada well into 2020, and the benchmark interest rate can be cut further if the Canadian economy continues to contract.
The recent new mortgage rules went into effect quickly after being announced. The rules will make qualifying harder so, whatever your mortgage need, it’s very important to get in touch as early as possible so I can review your situation and provide qualifying advice tailored to your situation and local marketplace. Professional mortgage advice has never been more important; it can make a significant difference to your long-term financial well being. Get in touch today!
Until next time,
Your mortgage expert Evgeny Kamenskiy