Toronto, Canada (PRWEB), December 17, 2014 – Canadalend.com , the leading low-cost, private mortgage solution provider in the country, is weighing in on how falling oil prices could have a direct impact on when the Bank of Canada raises interest rates.
“It had widely been predicted that the Bank of Canada would raise its key lending rate, which has been pegged at one percent since September 2010, sometime in the second half of 2015. Some even speculated that interest rates would begin to rise as early as May,” says Bob Aggarwal, president of Canadalend.com. “However, the recent decline in oil prices means the Bank of Canada could put any hikes in the interest rate on hold, at least until the economy stabilizes.”
Aggarwal explains that oil prices have been trending lower since the summer due to increased supply of North American shale oil and weak global economic data; oil prices faced serious pressure in mid-November when the Organization of the Petroleum Exporting Countries (OPEC) announced it would not reduce its output. These factors have seriously increased global supplies amidst decreased demand.
On Thursday, December 11, the price of West Texas Intermediate oil dipped below $60.00 per barrel, the lowest price since July 2009. The Canadian dollar fell in step, sinking to a five-year low of just 86.6 cents. Oil and gas are important parts of the Canadian economy, making up 20% to 30% of the value of the Toronto Stock Exchange. These same companies also account for about five percent of Canada’s gross domestic product (GDP). (Source: “The Importance of Crude Oil,” Natural Resources Canada web site; www.nrcan.gc.ca/energy/publications/markets/6505, last accessed December 12, 2014.)
“Before oil and gas prices fell, Alberta had been the country’s economic engine, driving most of the country’s growth. As a result, depressed oil prices will have a significant drag on the Canadian economy,” Aggarwal adds. “And Canada needs to be on a strong, sustainable economic footing to be able to handle rising interest rates. That means it’s quite possible that the Bank of Canada won’t raise interest rates until 2016.”
“With interest rates expected to remain low until late 2015 or even into 2016, it continues to be a great time for first-time home buyers and those looking to take out a second mortgage,” Aggarwal concludes.
As the country’s leading private mortgage professionals, the independent, licensed agents atCanadalend.com can help those looking for a mortgage or to consolidate debt find the best financial product at the best rates and with the best conditions.