The first quarter of 2017 is seeing little changes in the way of interest rates. As rates continue to sit at 4.64%, the Bank of Canada still has a strong message to convey: The economy isn’t out of the woods yet. However, with interest rates remaining steady, what does that mean for potential homeowners and current mortgage holders?
Will you see savings?
Most economists are predicting we won’t see a rate hike until the later part of 2018 and the possibility of a rate cut later this year. The Bank of Canada remains optimistic about its growth forecast but has offered little in the ways of our dollar. The Canadian dollar may see a further spike in Q1 which means that any growth potential the GDP is showing could mean great news. For homeowners and those looking to buy homes, taking advantage of the steady interest rates could mean savings down the road even if the Canadian dollar further dips.
What about south of the border?
With new policies in place in the United States, will that have an impact on our economy? Economists predict that the global economy is growing stronger due in part to the rising prices of certain commodities like oil. This had lead to a pull up of Canadian yields and potential new trade deals in the works. When it comes your mortgage, the economy plays a large role in how the Bank of Canada sets its overnight rate and if the economy remains steady, the forecasted rate hike will indeed only come in the latter part of 2018. However, policies that have not been set but are rumoured to be set by the United States could see the Canadian economy experience rapid growth or a sharp decline. Generally, though, economists remain optimistic about Canada’s future and the 4.64% interest rates.
What about inflation and employment? Do they affect rates?
Economists are seeing indicators that, although employment growth has remained firm, there may be a slack in the labour market. Moreover, residential investment and homeownership could be hindered due to changes in housing finance rules to try to deal with the number of foreign buyers coming in and muddling the market. Still, federal and provincial fiscal measures are still expected to support growth throughout the year with the Bank of Canada projecting our country’s GDP to grow by 2.1 percent over the next two years. As for inflation in our country, it has been lower than anticipated since October of 2016. This is due to the decline in food prices. Nonetheless, our neighbours to the south are looking into relinquishing or restructuring trade deals that could affect Canada’s inflation rate. Both inflation and employment should not have any bearing on rates in Q1 and they should remain confident at 4.64%.
The Bank of Canada will make their next announcement about the overnight rate on March 1st, 2017 with a full economic outlook update to be published on April 17th of the same year.Back
Your home is your most valuable asset. It is probably the single largest investment you will make in your lifetime. Your home is more than a place to rest your head and raise a family. Your home contains equity. It is a treasured resource and in some cases, can even be used as an ATM (aka cash back mortgages and HELOCs – don’t worry we’ll get there).
Everyone who is looking to purchase a home will need a mortgage. But, what is a mortgage exactly and why do you need it? Besides being the term to describe a loan secured by real estate, a mortgage allows you to access funding to procure your dream home.
There is a massive difference between mortgages and home equity loans. Read More
The Bank of Canada had hiked the interest rates on three separate occasions over the past eight months. Read More
Many first time home buyers have heard the term “mortgage insurance” but may not understand what it is and why it’s necessary to have. Read More
For new homeowners, or for those looking to renew a lease, rising interest rates will have an effect on your finances. Read More