Interest Rates in Canada to Stay Low – For Now
OTTAWA, Ontario – The Bank of Canada announced on March 2, 2010 that it’s overnight lending rate would remain at 0.25 percent. This was in spite of better than expected economic activity in the country over the last few months.
Previously the BofC had predicted annual growth in 2009 of 3.3 percent and inflation of 1.6 percent. But the actual numbers were more like 5 percent growth as of the end of December 09 and 2 percent inflation.
The Bank restated its commitment to keep interest rates on hold until the second half of 2010. The general feeling is that the better-than-expected growth in 2009 was skewed by “exceptional monetary and fiscal stimulus, as well as extraordinary measures taken to support financial systems.”
In other words, growth has been propped up by massive government stimulus programs. In Canada these programs will begin to phase out this spring, and growth is expected to slow considerably. So the pledge to keep interest rates low is an attempt to ease the economy through the transition period.
Some observers outside the BofC think it is unlikely the Bank will be able to keep rates at the current level for that long. Gregory Klump, Chief Economist for the Canadian Real Estate Association predicts that “interest rates will rise, but increases will be small and spread out over time.”
So from the perspective of 0 home buyers, the next few months are probably the best time to buy they are likely to see for some time. Current mortgage rates for conventional mortgages stood at 5.39 percent as of March 2, 2010, which is down 0.4 percent from a year earlier.
blogeasy :: Mar.11.2010 :: real estate trends :: No Comments »
