The Bank of Canada is persisting with its pledge to hold interest rates at the current amount of 0.25% after the latest rate announcement at the end of October. Professionals concur it is not the time to modify it.
The figure has been kept at record lows for half a year now and the Bank wants to keep it motionless at least till June 2010. 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 purchasers to buy properties.
Sadly there is always a few that call for interest rate increases. While we are seeing a massive bubble forming around the world this is making individuals decidedly uncomfortable. By boosting the rates of interest, many reckon this will stop the bubble from bursting. Many experts still believe that in spite of increasing prices and these bubbles forming it would be a mistake to increase interest rates at this moment in time.
We need to look at the reasoning behind why the experts don’t believe the interests rates should get higher and the main reason is that although the BoC indicated a 2% rise in the third quarter of 2009 the actual GDP growth is completely different. One of the other factors concern the domestic industry which is still observing very high levels of trade deficit and therefore a slower improvement.
At this time there is also no evidence that leveraging is on the increase, whilst this has its risks, it’s also a sign that the market is more sturdy. Inflation is close to -1%, leaving all fears behind for the present. Ultimately, the feared property market crash doesn’t seem to be in evidence. Real Estate prices are rising steadily with a good supply on offer on realtors books. With the property downturn last winter there was a backlog of properties which are now selling, as the demand is greater so the prices rise.
Whilst there are never any guarantees it is fairly certain that the BoC will fulfil its pledge to keep the interest rates low for a good few months yet. At least now the condo buyer can feel confident in purchasing their new property.
Tags: Canada, interest rates