Designing a Mortgage That's Right For You!
The Bank of Canada announced today that it is holding the benchmark interest rate unchanged at 0.5% with an optimistic outlook, noting that “federal and provincial measures are still expected to support growth in 2017” and predicting “a return to full capacity around mid-2018” as earlier projected in October. The Bank factored in Trump’s tax policies i.e. stimulus spending, resulting “in a modest upward revision to its U.S. growth outlook” which should benefit Canada. The Bank did not take into account U.S. policy changes that could negatively impact us, noting that there are “significant uncertainties weighing on the outlook'.
Last fall, the Ministry of Finance introduced four new mortgage tightening measures intended to cool the housing markets (aimed primarily at Vancouver and Toronto), reduce foreign investor home flipping, and control the levels of Canadian household debt. The Ministry also introduced risk sharing on mortgages for the Chartered Banks which puts upward pressure on mortgage rates as lenders need to set aside higher levels of capital for certain types of funds.
The Central Bank predicts for 2017 that it expects oil prices and the Canadian dollar to stay close to the $50 US for a barrel of crude (currently around $52.48 US per barrel at January 17th), and 75 cents US for the Canadian dollar (currently at 77 cents US at January 17th). Low interest rates help keep the Canadian dollar low which in turn aids our export market, however global demand for our products has stalled. The European Union members' debt crisis, global oil-price collapse, and Brexit have undermined markets and consumer confidence. In addition, the uncertainty over our trade position with the U.S. as a result of the U.S. election is expected to delay capital spending and business investment in Canada.
We expect to see interest rates staying low in Canada well into 2020. The Bank of Canada believes it must continue its monetary policy of ultra-low rates to control inflation, stimulate other sectors of the economy besides housing and spur our Canadian export market.
The new mortgage rules have caused mortgage rates to be very complicated, and it’s not as easy as it used to be to get a quick rate quote. That’s why you want to work with an experienced Victoria mortgage broker who has access to a wide range of lenders and knows the right questions to ask to assess your situation and provide the best mortgage and rate for your needs. Save yourself time and stress; don’t just ask what the rate is, have a conversation instead. Get in touch today if you are planning a purchase, have a mortgage renewal, or want to use today’s low rates for renovations or to refinance and save thousands by moving your high interest debt to your low-rate mortgage.