Toronto, Canada (PRWEB), October 22, 2013 – Canadalend.com , the leading low-cost private mortgage solution provider in Canada, weighs in on two conflicting reports that speculate on when the Bank of Canada will raise its overnight lending rate; a guideline used by banks to set variable mortgage rates.
“The Bank of Canada has kept its overnight lending rate at one percent since September 2010, noting it wouldn’t raise it until the domestic economy got stronger,” says Bob Aggarwal, president of Canadalend.com. “With the overnight lending rate impacting variable mortgage rates, many potential home buyers have been wondering when that will be.”
According to the International Monetary Fund (IMF), it will occur in the second half of 2014. Meanwhile, the Bank of America noted that Canada’s central bank will keep its policy interest rate at one percent until the first half of 2016. An increase in Canada’s lending rate will be dependent on Canada’s growth prospects, which are tied directly to the U.S. recovery. Sustained growth in the U.S will have a direct impact on strengthening Canadian exports and business investment.(Sources: Quinn, G. “IMF says Bank of Canada seen raising interest rates in late 2014,” Deseret News web site, October 8, 2013; http://www.deseretnews.com/article/765639527/IMF-says-Bank-of-Canada-seen-raising-interest-rates-in-late-2014.html ; Quinn, G., “Bank of America Says No Canada Rate Increase Until 2016,” Bloomberg web site, October 8, 2013; http://www.bloomberg.com/news/2013-10-08/bank-of-america-says-canada-won-t-raise-policy-rate-until-2016)
The IMF forecast for 2014 was contingent on the recent U.S. government shutdown being short-lived and the U.S. debt ceiling being raised, Aggarwal explains. While both of these issues have since been resolved, the fallout has the potential to slow down a tepid U.S. economy.
“According to one estimate, the U.S. government shutdown took at least $24.0 billion out of the U.S. economy. This equals at least 0.6% of projected annualized fourth-quarter GDP growth,” Aggarwal observes. “What this means is that depressed drivers of growth south of the border could push back the IMF’s projections to further into 2014, or even later. That said, banks have never been shy about raising mortgage rates ahead of any announcement from the central bank.” (Source: Perlberg, S., “S&P: The Shutdown Took $24 Billion Out Of The US Economy,” October 16, 2013; http://www.businessinsider.com/sp-cuts-us-growth-view-2013-10 .)
According to Aggarwal, thanks to a strong Canadian real estate market, there is no reason for domestic banks to lower their mortgage rates, despite economic instability in the United States. At the same time, he says, it’s hard to predict if and when Canadian mortgage rates will increase further.
“For first-time home buyers, it’s important to remember that while mortgage rates have been climbing, they are still relatively low,” Aggarwal concludes. “Those looking to lock in at today’s rates can contact the independent mortgage brokers at Canadalend.com and get pre-approved in less than 24-hours. A Canadalend.com agent can also help clients decide which kind of mortgage is best suited for their financial and lifestyle needs.”
Canadalend.com is one of the largest, most trusted private mortgage brokers in Canada, with skilled independent licensed professionals helping Canadians coast-to-coast. Canadalend.com provides its clients with residential and commercial mortgages, home equity credit, debt consolidation, and financing concerns. To learn more about Canadalend.com, visit the web site at Canadalend.com .