The Bank of Canada has announced that due to growth decline, these low interest rates will not be going anywhere for a while. They are predicting that the economy will be back up in full force for about mid 2015. This indicates that these historically low interest rates will stay in this range well into 2014, possibly longer. The central bank kept its overnight trendsetting rate (which influences our borrowing costs) at 1 %. This has stayed this way since September 2010. Economists are recommending in order to hoist the economy back up, the Bank of Canada governor to cut down on the bank’s tightening mortgage rules (that were introduced last summer). However, the governor of the Bank of Canada is not budging, saying the economy will eventually recover and repair itself.
The bank views warning customers of higher interest rates to come to be ‘irresponsible consumer borrowing’, their argument being that on average each Canadian household owes 165% of their disposable annual incomes to debt. Regardless of this fact, Today’s policy statement indicates that these rates are to stay low at least until mid 2014 or potentially longer.
To sum up, the Canadian Economy will not be back to full capacity until at least mid 2015, at this time inflation is expected to rise to 2%, where the banks typically want it. Canadians should expect growth to accelerate to 2.5% by the end of the summer according to the Banks. the economy will gradually come back up but it is going to take some time before this happens. This is great if you’re in the market to buy or refinance as interest rates are at historically low records! Just another reason why you should go with a mortgage broker!