The Bank of Canada kept their overnight rate steady once again today although they appear prepared to reduce rates going forward. Falling oil and commodity prices are pointing to lower inflation and many analysts are talking about the end of the recent "commodity boom" which helped the Canadian economy but fueled inflation around the world. After the US election in November, all bets are off with respect to interest rates. While I am not predicting a jump in rates after the election early in 2009, the start of a new presidential term is typically when tough medicine is doled out to fix the economy. An upward draft in US rates would come as no surprise. If you would consider yourself interest rate sensitive, and would have trouble sleeping at night if faced with an increase in interest rates and consequently higher monthly mortgage payments, you may wish to lock-in your mortgage rate now for a minimum four year period. I don't anticipate rates going substantially below their current point, and am of the opinion that rates have more upside potential than down. I'd recommend locking in now if a potential increase in Mortgage rates could jeopardize your financial position.
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