On the bright side, variable mortgage rates remain unchanged!Well, it looks like there’s good news and there’s bad news. The good news? Variable rate mortgage holders can once again rest easy with the Bank of Canada’s recent announcement to keep the overnight rate stagnant at 1%. It looks like you’ve once again dodged a rate increase. The bad news? The BoC announcement was downright depressing!
As far as a media relations approach goes, the Bank of Canada is typically rather reserved when explaining its decisions regarding interest rates. This time around, however, it used some pretty strong language regarding the state of the global economy:
- “The outlook for the global economy has deteriorated and uncertainty has increased since the Bank released its October Monetary Policy Report” - “The sovereign debt crisis has intensified, conditions in international financial markets have tightened and risk aversion has risen” - “The recession in Europe is now expected to be deeper and longer than anticipated”
Other negative factors contributing to the bank’s decision include U.S. household debt levels, decelerating Chinese growth and lower-than-expected commodity prices. The bank’s Canadian economic outlook is also on the grim side, with a more modest pace of growth expected.
There was one nugget of optimism in the announcement, though. Thanks to the low interest rates and “very favourable financing conditions”, the bank is expecting consumer spending and housing activity to remain strong. That, combined with low variable rate mortgages, should be enough of a silver lining to make any homeowner happy.
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