The Outlook for Canadian Interest Rates Looks Good
Posted by Foreclosure Prevention in Real EstateThe Bank of Canada is persisting with its promise to hold interest rates at the current level of 0.25% after the latest rate announcement at the end of October. Professionals acknowledge it is not the time to modify it.
The low figures have already been in force for 6 months and the bank expect to keep it for another 8 months at least. As any real estate agent would tell you, one of the main factors in the property market recovery and continued prosperity in that area are these low interest rates.
Interest rate increases are being called for by certain people. Massive bubbles around the planet made people cautious. Rather than risk the bubble rupturing, many believe it can be headed off by hiking interest rates. Taking this into account, even with rising prices in the property market and faster turnover, the experts still agree that the Bank of Canada has made the proper decision.
The most important reason is the tangible growth of the GDP, which doesn’t seem to be following the BoC forecast of a 2% rise in the third quarter of 2009 (August growth was -0.1%). Additionally, the trade deficit is at a record high, what indicates a more arduous recovery for domestic industry.
Also, financial guides don’t show any signs of growing leverage (the chancy use of debt to raise return on investments). There is more calmness around due to inflation running at roughly -1%. Finally, the feared property market crash doesn’t seem to be in evidence. Prices are growing, but the inventory flow remains steady. The prices are following a sharp increase in real demand, which was closed up during last winter’s slowdown.
It is very unlikely that the BoC will go back on on its assurance to keep interest rates low till at least June 2010. Good news for home buyers!
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