5 key points from Bank of Canada Review – Spring 2015
Bank of Canada update on the Economy and the Mortgage Rates is offering a bit of hope for the Canadian Economy
The Bank of Canada (BOC) offered a ray of hope last week and announced that it would leave its overnight rate unchanged, as was expected. If you are looking to refinance, renew or looking to buy a home in the near future, this is great news as the key overnight lending rate tends to influence mortgage rates.
Here 5 key points from the statement released:
- Inflation is running “near the bottom” of the BOC’s target range of 1% to 3%. Although the core inflation remains above 2%”, lower energy costs and the low Canadian dollar have helped to keep the over all inflation rate near the bottom of the BOC target range.
- On an overall basis, the BOC believes that our rate of inflation is “consistent with persistent slack in the economy”. The BOS believes there is plenty of room to grow before it reaches full capacity considering all factors affecting the Canadian economy.
- The Canadian economy “remains largely in line” in its most recent forecasts and expects the second quarter to continue to improve. Although the GDP in both the US and Canada were down in the first quarter, the contraction most probably was due to the shock of the sharp decline in oil prices and other short-term factors such as weather and recent strike in the western US ports . The market correction is expected to a one time charge against the economy and the forecast remains optimistic.
- Loonie’s recent rise in value in the context of higher oil prices is of concern if it continues and will need to followed closely. These areas may cause other areas of our economy to slow down as higher costs of production and fuel costs make our exports more expensive. This rise, if sustained, my prompt the BOC to make another rate cut later this year.
- The Silver lining in the numbers maybe the Canadian economy itself as Canadians continue to spend as “Consumption in Canada is holding up relatively well” despite any uncertainties in the economy.
The full report can be viewed on the BOC website ate http://www.bankofcanada.ca/wp-content/uploads/2015/05/boc-review-spring15.pdf
Five-year variable-rate mortgages are averaging around the 2.1% OAC but can be a few points higher or lower depending on the conditions/options you choose, your credit history and the property itself.
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5 key points from Bank of Canada Review | Getting a mortgage can be hard, we make it easy® | Mortgage Broker Lic # M14000543 / Brokerage Lic #12136 | 647-773-9001 | info@RedDogFinancial.ca | www.RedDogFinancial.ca | June 1, 2015