Tag Archives: Interest Rates

Bank of Canada sees limit to low interest-rate strategy

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High household debt is stretching the Bank of Canada’s low interest rate strategy to the limit, Senior Deputy Governor Tiff Macklem said on Thursday, hinting that the central bank will retain its bias toward higher interest rates.

Macklem, considered the strongest candidate to be the next governor of the central bank after Mark Carney leaves later this year, said keeping rates low for the longest period since the early 1950s was the right thing to do during the global financial crisis and in its aftermath.

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Too soon to bet against a variable-rate mortgage?

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When it comes time to renew your mortgage the question always comes up: How much money are you leaving on the table if you opt for fixed rate over variable?

Academic studies indicate that the best predictor of future interest rates is the current yield curve. Based on that, interest rates are going to be pretty low for the foreseeable future. Add in some shallow discounting off prime for variable-rate mortgages and it’s easy to see why almost everyone is opting for fixed-rate mortgages these days. Even a new player on the mortgage scene has decided that a five-year fixed-rate mortgage is the only option to consider offering to clients.

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Variable-rate still the cheaper mortgage option

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The smart money’s long infatuation with the variable-rate mortgage has ended, perhaps a little hastily.

A lot of homeowners have saved a ton of money with variable-rate mortgages, where your borrowing cost floats with your lender’s prime lending rate. The prime rate is in turn guided by the Bank of Canada’s overnight rate, which was pounded lower in the financial crisis of 2007-09 and hasn’t rebounded. And yet, for reasons that may not be entirely sound, the popularity of the variable-rate mortgage is in decline.

Read more:  http://tinyurl.com/d8a7pux

Canada’s tame inflation cuts chances of rate hike soon

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OTTAWA — Tame inflation, combined with weak economic growth in this country and continuing global uncertainty, will likely keep interest rates at rock-bottom levels for some time to come.

Canada’s rate of inflation remained steady again in October, although slightly stronger than expected, with higher food and transportation prices offsetting a slower rise in energy costs.

Read more:  http://tinyurl.com/d5sugwy

As price pressures ease, need for interest rate hikes vanish, say economists

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OTTAWA- Inflation pressures in Canada continued to ease in September, setting the conditions for what economists believe will be a lengthy period of low interest rates.

Statistics Canada reported Friday that last month’s inflation rate stayed at 1.2 per cent— matching a two-year low also achieved in August and May of this year.

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