The Bank of Canada made a statement on the 25th of May in regards to the key interest rate. Although (as expected by those in the know) there was no change in the rate, the announcement provided some interesting clues about the expectations the bank has for the overall economy. The key interest rate had hovered at 0.5% for some time, and the Bank of Canada has maintained that number. The last time it made an announcement, the outlook for the overall economy was positive. This time, things might not be quite the same but that means good news for mortgage hunters!

The announcement on the key interest rate

The Bank of Canada influences monetary policy by manipulating short-term interest rates, and does so by either raising or lowering the target for the overnight rate. The overnight rate is the rate at which banks lend money among themselves. It is often tied to the overall economic outlook for the country. The bank announces its key policy interest rate 8 times per year.

What changes were made?

It was widely expected that the rate would stay at .5%. Money was coming cheap, and the bank wanted it to stay that way. No changes were made to the rate as of the 25th. The good news is that we can learn a lot about how the Bank of Canada views the economy by this announcement. It is widely held among experts that the bank is not nearly as positive about the economy as it was last time it made its announcement.

Recent economic data has shown a slowdown in growth for the first quarter, and massive environmental issues such as the forest fires in Alberta have slowed down economic activity in the area. While this might not be good news for the economy as a whole, it could be very helpful to those looking to get mortgage. Here’s why:

What does this mean for mortgage lending?

The mortgage lending industry, and money lending in general, is heavily tied to the economic status of the nation. If the Bank of Canada forecasts an economic slowdown, this means that interest rates are going to stay low, which in turn means this is a great time to buy property. Borrowing money is cheap, and prices are going to drop.

The good news is that Team Levine can help – we can get you the best mortgage rates. Contact us today for more information on obtaining the right mortgage for your needs. With the forecast for the economy as it is, there’s no better time to buy property than right now.