Market Update

There have been a couple of highlights for the Canadian housing market in the past week: the U.S. Federal Reserve announcement that it is committed to low interest rates until 2015 and the latest global housing outlook that puts this country in better shape than most. Anyone looking for a mortgage or a renewal will likely be heartened by the American central bank's interest rate pledge.

The commitment to low rates makes it harder, but not impossible, for the Bank of Canada to move on its desire to increase rates.  As for the global housing outlook, it shows Canadian prices continue to rise, albeit more slowly than a year ago. But around the world, countries showing price declines outnumbered gainers by more than two to one.

The Bank of Canada will maintain its rate

The Bank of Canada announced today it will maintain its overnight rate at 1% – while also hinting at the future withdrawal of that stimulus.

“In Canada, while global headwinds continue to restrain economic activity, underlying momentum remains at a pace roughly in line with the economy’s production potential,” writes the Central Bank in its rate review statement. “Economic growth is expected to pick up through 2013, with consumption and business investment continuing to be its principal drivers, reflecting very stimulative financial conditions.”

The current conditions, at least globally, don’t paint quite so rosy a picture. The bank points to “widespread slowing of activity across advanced and emerging economies,” a plodding US economy and a recession-rife Europe.
 These factors will continue to keep interest rates low which will allow Canadians to borrow money at record lows.  BoC is not expected to raise the overnight rate until 2013.