At the end of October the Bank of Canada reported it was to hold interest rates at the current level of 0.25%. This decision was exactly what experts accept to be the way forward for Canada.

The low figures have already been in operation for 6 months and the bank expect to keep it for another 8 months at least. As any real estate agent would tell you, one of the major ingredients as to why the Canadian property market has seen a good rebound from the recession, is the attractiveness of these low interest rates, which is allowing purchasers to buy properties.

Sadly there is always a few that call for interest rate hikes. Gigantic bubbles around the world made bodies cautious. By increasing the rates of interest, many believe this will stop the bubble from exploding. Many experts still believe that despite higher prices and these bubbles forming it would be a mistake to increase interest rates at this moment in time.

Canada’s overall economic performance did not follow the BoC’s predictions of a 2% jump for the third quarter of 2009 and this is why most professionals do not believe an interest rise should occur. One of the other aspects concern the domestic industry which is still observing very high levels of trade deficit and therefore a slower improvement.

Also, financial pointers don’t show any signs of growing leverage (the chancy use of debt to raise return on investments). Inflation is close to -1%, leaving all worries behind for now. The other factor, is all this is the property market, which doesn’t seemed to have crashed as anticipated. Properties passing through realtors office’s remain steady and prices are rising. With the property downturn last winter there was a backlog of properties which are now selling, as the demand is larger so the prices rise.

It is very doubtful that the BoC will backtrack on its promise to keep interest rates low till at least June 2010. At least now the house buyer can feel confident in buying their new property.

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This entry was posted on Friday, January 29th, 2010 at 7:58 am and is filed under Real Estate Investments. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.