The Outlook for Canadian Interest Rates Looks Fine
// November 17th, 2009 // Real Estate
At the end of October the Bank of Canada announced it was to protect interest rates at the current amount of 0.25%. Many experts agree with the Bank of Canada’s announcement.
The bank is wanting to keep the current level until at least June 2010 which will mean the level will have been low for over a year. As any real estate agent would tell you, one of the major reasons why the Canadian housing market has seen a good rebound from the recession, is the attractiveness of these low interest rates, which is allowing buyers to buy properties.
Interest rate increases are being demanded by certain bodies. While we are seeing a huge bubble forming around the world this is making individuals decidedly uncomfortable. A lot of people feel the best way to stop the bubble before it blows is to hike interest rates. Many experts still believe that regardless of increasing prices and these bubbles forming it would be a mistake to increase interest rates at this moment in time.
Canada’s overall economic performance did not follow the BoC’s forecast of a 2% increase for the third quarter of 2009 and this is why most experts do not believe an interest rise should occur. While there are still huge debts within the domestic industry, experts believe that increasing interest rates will damage the recovery which is already tortuously slow.
Also, financial pointers don’t present any signs of growing leverage (the chancy use of debt to raise return on investments). Inflation is close to -1%, leaving all worries behind for the time being. The other factor, is all this is the housing market, which doesn’t seemed to have crashed as anticipated. Prices are increasing, but the stock flow remains stable. The prices are following a sharp growth in real demand, which was boxed up during last winter’s slowdown.
It’s more than feasible that the Bank of Canada will not break its promise and will hold down interest charges for at least eight more months. At least now the home buyer can feel assured in buying their new property.
