Interest Rate Believed to Hike in 2010 Q3

More and more indicators of Canadian economy show positive results and suggest the third quartile of 2010 will be the time, when the interest rate will finally start hiking.

Latest real GDP reports (September +6.2%, October +3.7%, November +4.9%) confirmed the positive trend in our economy and BoC prediction of 3.3% growth for Q4 finally seems pretty real. We have to understand that current interest rate is an emergency rate, set to prevent critical failure and collapse. Now a low rate, not the emergency rate is needed.

Our country is in more favourable situation than our southern neighbour, or most of the European economies. Canadian households' credit situation is acceptably healthy (foreclosures were never a serious issue here) and boosting demand for natural resources from Asia (once again) will represent substantial additional income for Canadian economy.

The last but not least – Canadian real estate market is doing so well, that some fear it is a start of just another bubble. Indeed, I have to agree that extremely low interest rate is not healthy for the market in the long term (and I have to add that I disagree we witness another bubble now).

However, home buyers don't have to be afraid – low interest rate will be probably kept for several years more, making the housing affordable.

Leave a Reply

Your email address will not be published. Required fields are marked *