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Canadian Interest Rates Rise - Now What? |
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July 21, 2010
Yesterday the Bank of Canada announced a quarter point increase in the overnight lending rate, taking it from .5% to .75%. The increase was not a surprise. It was the expected move given their bullish words back in April and the strength of the Canadian economy overall in 2010.
But, global uncertainty has slowed the Canadian economy a bit more than expected. And with the Canadian housing market slowing again things are still looking positive but not overheated. Our job growth numbers are up which is a very positive thing, but it’s not all sunny skies as stated by the Bank of Canada Governor Mark Carney in yesterdays statement:
"While employment growth has resumed, business investment appears to be held back by global uncertainties and has yet to recover from its sharp contraction during the recession."
So what does all this mean for real estate investors in Canada?
I have one word for you: OPPORTUNITY.
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Homeowners are more financially fit |
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July 20, 2010
Homeowners are in the best shape when it comes to financial fitness in Canada. Sixty five per cent of homeowners pay off their credit card balances each month (vs. 48 per cent of non-homeowners). Furthermore, a quarter of those homeowners with mortgages have managed to make a lump sum payment or accelerate their mortgage payments in the past year, according to a survey sponsored by Genworth Financial Mortgage Insurance Company Canada ("Genworth Financial Canada").
Almost half (44 per cent) of homeowners were able to pay all of their bills and save some money in the past year suggesting a strong correlation between homeownership and financial fitness.
"Homeownership is an achievable goal for those who are prepared," said Peter Vukanovich, President and Chief Operating Officer of Genworth Financial Canada. "Homeownership helps people focus on their financial situation and get their fiscal house in order."
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Bank of Canada raises key overnight rate |
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July 20, 2010
The Bank of Canada raised its benchmark policy rate Tuesday to 0.75% even though it scaled back its growth outlook on the belief budget cutting among households and governments in advanced economies is expected to “temper” the pace of the global recovery.
GDP in Canada is now expected to expand 3.5% this year and 2.9% in 2011, the central bank said, compared to its previous outlook in April of 3.7% and 3.1% growth, respectively. However, business investment and trade are expected to make a larger contribution to Canadian growth, which up until now has relied heavily on a confident consumer.
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