Are you in a variable rate mortgage? Great news! Your rate is not changing this month and should not change in the foreseeable future!
Interest rates will remain low for a long time. Inflation will have to hit a target of 2% and be sustained for a period of time before we see the target rate start to increase. This could realistically take up to two years. The Quantitative easing program will continue and as a result, we will not see negative interest rates. The economy is Canada is starting to recover, with the federal and provincial governments easing restrictions. However, we are still going to see negative growth for Q2. There are estimates that we could be down as much as fifteen percent compared to the end of 2019 and this makes it one of the biggest declines since the Great Depression. However, this is not as big of a decline as some of the worst case scenarios predicted in the April Monetary Policy Report. The cushioning of the fall is a result of decisive and necessary fiscal and monetary policy actions that has supported the incomes of Canadians and kept credit flowing. This also should lay the foundation for recovery in Canada.
With more of the economy up and running, we will see a sharp increase in economic activity. Month-over-month home sales increased substantially in June according to the Canadian Real Estate Association (CREA). There was a sales increase of 83.8% in the Greater Toronto Area, 75.1% in Montreal, 60.3% in Greater Vancouver, 99.7% in the Fraser Valley, 54.9% in Calgary, 59% in Edmonton, 22.5% in Winnipeg, 34.8% in Hamilton-Burlington, 67,9% in London and St. Thomas, 55.6% in Ottawa and 43.6% in Quebec City. There will be however, a more prolonged recuperation phase, after the initial spike. We will see uneven periods of growth across different regions and sectors. It will take some time for the economic output in Canada to reach pre-COVID-19 levels.
The bottom line is that interest rates in Canada are very low and will remain very low for a long period of time. So with more inventory on the market, and rates so low, now is a great time to be looking at purchasing a property! Reach out to me or your local Dominion Lending Centre for further information and advice!