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Posts tagged ‘finance’

Bank Of Canada Slashes Key Interest Rate by 0.5%


April 22nd, 2008

In keeping with its mandate to keep inflation in Canada at the 2% target, the Bank of Canada todayBank Of Canada announced that it was lowering its overnight lending rate by 50 basis points (one-half per cent) to 3%. Citing deepening economic woes in the U.S., tightening credit conditions, and overall instability in the world economy, it’s hoped that this economic stimulus, along with strong domestic demand and high employment, will help keep Canada’s economy performing well.

The Bank forecasts that Canada’s economy will grow by 1.4% this year, 2.4% in 2009, and 3.3% in 2010 when the Bank also projects that inflation will reach the target 2%. The overnight rate has been lowered 150 basis points (1.5%) since December of last year.

The press release hinted that this may be the last of the rate cuts for a while – the timing of any further monetary stimulus will depend on global conditions and their effect on Canadian inflation.

This news is positive to anyone on a variable-rate mortgage, which is tied to the central bank rate. Fixed-rate mortgages are slower to come down, but should fall into line with the rate cut. With more and more choices on the market than in recent years, buyers are in a good position to extend their purchasing power and get into their perfect place.

The Bank’s next meeting to discuss interest rates is June 10, 2008.

Read the full Bank Of Canada press release here.

Tim Ayres

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Bank Of Canada Expected To Cut Interest Rates


Don’t forget, the Bankof Canada meets tomorrow, April 22nd, 2008. The Bank is expected to cut interest rates by another 50 basis points (0.5%) to generate some stimulus in the weakening economy. This is of course great news for anyone on floating rate mortgages and buyers of real estate. With MLS listings at numbers we haven’t seen in years, buyers have more choice than ever when looking for that perfect place.

Be sure to check back tomorrow to see my post about the rate change meeting and my commentary.

Tim Ayres

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Interest Rates may decrease; at least hold.

Why might the recent turmoil in the financial markets be good for home owners and buyers? See below:


TORONTO — The global financial turmoil that has rocked world financial markets may have a bright side for Canadians —    it could end up keeping interest rates lower despite rising inflation, economists say.

With stocks under siege and the world’s central banks trying to calm markets down and prevent a global credit crunch caused in part by a battered U.S. housing sector, economists say the Bank of Canada will likely hesitate to raise borrowing costs in such a volatile environment.

“If anything, the turmoil might actually, possibly, lead to lower interest rates than would have otherwise been the case,” Doug Porter, a senior economist with BMO Capital Markets, said yesterday.

“I’m not saying the Bank of Canada is necessarily going to go and cut interest rates, but they’re potentially less willing to rise interest rates amid this volatility.”

Like many economists, those at BMO had been expecting the Bank of Canada to raise rates in September to dampen inflationary pressures, possibly again in October and then in early 2008.

That would have raised borrowing costs in Canada by three quarters of a point, hiking payments for homeowners renewing mortgages, and consumers and businesses looking to borrow money.

“That series of potential rate increases is being put at least in some question because the bank may not be all that enthusiastic about raising interest rates when the financial markets are going through so much trauma,” Porter said.

That may only be short term, says David Wolf, an economist with Merrill Lynch Canada. Markets expect Bank of Canada governor David Dodge to keep rates on hold next month, but inflationary pressures are still building in the hot Canadian economy.

If you’re looking to find your perfect place and lock in at a good rate, contact Tim Ayres at 642-6361 and let’s get started!