Interest Rates to Be Held at Their Current Level
At the end of October the Bank of Canada reported it was to maintain interest rates at the current rate of 0.25%. Experts agree it is not the time to change it.
The bank is wanting to keep the current figure until at least June 2010 which will mean the rate will have been low for over a year. As any real estate agent would tell you, low interest rates are the key instrument for the housing market rebound and still fuel the solid number of sales realtors are experiencing all around Canada.
Unfortunately there is always a few that call for interest rate raises. While we are seeing a large bubble forming around the world this is making people decidedly edgy. By boosting the rates of interest, many believe this will stop the bubble from exploding. Regardless of rising prices and a more rapid pace in the real estate trade, most of the experts say it is not the time to raise rates.
We need to look at the logic of why the experts don’t believe the interests rates should rise and the main reason is that although the BoC forecasted a 2% rise in the third quarter of 2009 the actual GDP growth is completely different. One of the other considerations concern the domestic industry which is still seeing very high levels of trade deficit and therefore a slower improvement.
At this time there is also no evidence that leveraging is on the up, whilst this has its risks, it’s also a sign that the market is more stable. There is more confidence around due to inflation running at about -1%. Finally, the expected real estate market crash doesn’t seem to be in evidence. Real Estate passing through realtors office’s remain stable and prices are increasing. The prices are following a sharp increase in real demand, which was boxed up during last winter’s slowdown.
It’s more than plausible that the Bank of Canada will not break its promise and will hold down interest rates for at least eight more months. Good news for house purchaser!
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