If you own property or am thinking about owning property, the decisions made by the Bank of Canada could have an affect on the mortgage rates you would pay. When the Bank of Canada (BoC) met last week, it left it’s overnight rate unchanged at 1.5% as was widely expected. This of course might change when they next meet on October 24.
Experts believe that there is currently about an 80% probability, that it will raise by another 0.25% next month. In the past, the Bank would often use language that effectively warned the market if another hike was imminent. In a recent speech given by BOC Governor, Poloz, he conceded that the Bank is currently navigating through a period of heightened uncertainty, which is diminishing its ability to offer forward guidance. It would rely more heavily than normal, on fast incoming data when determining its future policy-rate path.
Here is a summary of what the key recent data are indicating about our economic momentum.
Five Highlights from the BoC’s latest statement:
- The BoC acknowledged that the recent inflation data had come in “higher than expected”, but it attributed this to a temporary spike in airfare costs and predicted that the inflation rate would move “back towards 2% in early 2019 as the effects of past increases in gasoline prices dissipate”.
- The Bank observed that overall global growth been consistent with its most recent projections and that “the U.S. economy is particularly robust, with strong consumer spending and business investment”. That said, the BoC also acknowledged that “elevated trade tensions remain a key risk” for the global outlook and that “financial stresses have intensified in certain emerging market economies”
- The BoC assessed that the Canadian economy is evolving “closely in line” with its most recent projections, with slow first quarter GDP growth of 1.4% being followed by a strong rebound to 2.9% in the second quarter. The Bank expects our GDP growth to slow again in the third quarter “mainly because of fluctuation in energy production and exports.”
- The BoC expressed confidence that the economy’s rotation toward business investments and exports was evolving as hoped. It observed that “business investment and exports have been growing solidly for several quarters” , that “continuing gains in employment and labour income are helping to support consumption”.
- Encouragingly for our policy makers, the BoC also noted that ‘credit growth has moderated and that household debt-to-income ratio is beginning to edge down”. In it’s key closing statement, the BoC reiterated its belief that “higher interest rates will be warranted over time”, but once again emphasized that it would ‘take a gradual approach, guided by the incoming data”.
In summary, BoC’s latest statement confirmed that it is still leaning toward additional rate increases, but the more important detail for anyone with a variable-rate mortgage, is the timing of when these increases will occur.
One of the great benefits of using a mortgage broker, is that your mortgage broker will be able to offer you the best option for your personal situation. Don’t hesitate, contact us today if you need assistance with a mortgage.
Original article: www.movesmartly.com
