Turns out the sky is not falling.
After 18 months of warning that skyrocketing interest rates will wash over vulnerable homeowners like a tsunami, the Bank of Canada is hinting that its next interest rate move will not be up – but down. Either way, most economists say the benchmark rate will remain right where it’s been for over three years – 1 per cent - until at least some time in 2015.
The reason? The Bank of Canada and most economists have been overestimating the need to raise interest rates to control growth, and underestimating the weakness in the global economy. Emerging market powerhouses like China have been losing steam and the U.S. economy is still lumbering along. That means weaker demand for the resources Canada exports. It also means slower economic growth, continued high unemployment and a smaller chance the boss will be giving out raises this Christmas.
But that hasn’t stopped bond and mortgages rates from creeping up. This week the Bank of Montreal raised rates on itsRead More »from Mortgage regret: Canadians may pay dearly for locking in