I wanted to share a bit more information with you on what we see happening with interest rates; the article is below. It appears to be a story of stability, which is long over due after all the regulatory mortgage changes and the ensuing 5 interest rate hikes, all of which put a bit of a wet blanket on the housing market.
Residential Market Commentary – Bank of Canada holding steady against headwinds
The Bank of Canada has not just stepped to the interest rate sidelines, it has pulled up a chair and taken a seat. The latest statement from the Bank gives every indication it intends to continue raising rates, but it is in absolutely no hurry to do so.
The key concern appears to be oil. The low price of crude is seen as a weight on the entire Canadian economy, although not as heavy a weight as in 2014 which led the Bank to actually cut rates in an effort to get things moving again. The situation with oil is part of a greater global uncertainty caused by trade tensions between the U.S. and China.
The Bank also cites a slowdown in Canada’s property market as an economic headwind. But, of course, that headwind is the natural and intended consequence of government intervention.
High household debt remains a serious worry for the BoC. It stands at nearly 178% after creeping slightly higher again in the third quarter of 2018. Most of that is mortgage debt and the Bank is keeping a close watch on how consumers are responding to rising rates.
By its own calculations the Bank figures 90% of the Canadian economy is working at capacity. That would seem to indicate the Bank will continue with its slow and cautious approach.
Post a comment