This is important for anyone looking to acquire a loan or a mortgage. Canada’s largest banks base their interest rates largely on the decisions made by the central bank of Canada. While other countries are talking of cutting their rates and perhaps injecting stimulus causing their banks to perhaps ease some of the mortgage and interest rates to an even greater low; Bank of Canada governor Mark Carney has decided to hold firm believing consumption and investment will drive the economy forward, and even hinting that rates may be on the rise in the near future.
What this means is the time to apply for a mortgage or a boost in credit is now because the central rate may not stay at 1 percent for much longer; therefore, the banks will be inflating their rates in the not so distant future as a result. As other nations look to cut their key lending rates, Canada’s decision to hold firm is a sign the Canadian economy while not completely out of the woods, is actually faring much better than much of the developed world. Carney hopes this decision and the cautious optimism that comes with it may help ease consumers’ worries so that we all start to spend more and ultimately help stimulate the economy even further.
What was left out of the statement was mention of the government’s decision to cut the amortization of government backed insured mortgages to 25 years down from 30. The Bank made a brief comment on the housing market by stating it expects things to slow down; not necessarily good news for people looking to get a mortgage and buy a home. With rates holding and expecting to rise in the near future on top of the government’s move; buyers may be backing off while sellers look to get the added value for their homes as house prices should rise with higher rates.