Here are some of the more notable interest rate and housing-related headlines from the past week:
- Central banks signal low rates here to stay
- Recession may be over but growth will be limited next year: CIBC
- Worst is Over for Housing Market, Economists Say
Among the takeaways…
- CIBC economist, Avery Shenfeld, proclaims: “Canada's inflation rate will be no threat to the Bank easily fulfilling its pledge to keep interest rates at a slim quarter point through mid-2010. In fact, market expectations for rate hikes in the first half of 2010 could be a full year too premature.”
- Bank of America Securities-Merrill Lynch says it does not expect the Bank of Canada to begin raising rates until 2011.
- National Bank economist, Marc Pinsonneault, believes mortgage rates won’t rise over the next 12 month by more than 50 to 75 basis points from today’s 5.85% five-year fixed posted rates.
On the housing front…
- TD economist, Don Drummond, says: “A similar pattern in [the US and Canada] is unmistakably suggesting we’ve not only bottomed in housing, but we’re on the way back up.”
- BMO Capital Markets economist, Jennifer Lee, agrees, saying: “The housing market has clearly turned the corner.”
As usual, long-range forecasts are fraught with hazards, so the above should be placed under the “For what it’s worth” heading…
Heh… interesting.
I was saying that rates won’t go up until 2011 back in July 2008.
http://kendrosm.blogspot.com/2008/07/economy-rebounding-hmmm-dont-think-so.html
Hey Ken, if you reply with next weeks winning lottery numbers I’ll consider you a genious…otherwise good guess on 2011..
Inflation could be back sooner than people think. Don’t count out higher rates by mid 2010. The BOC promised to keep rates low till June 2010 for a reason.
Lots of deflation out there, but inflation is right around the corner. The bank of Canada, is peanuts anyway, they have ZERO to do with the interest rates.
Do you think they had the power to keep rates high this time?!?
Point proven, they just follow what happens at larger, nothing further. Their promise is based on what happens which is categorically out of their control. Thus, their promise is empty and conditional. We’ll see rate increases when we see them…just as soon as deflation turns to inflation :)
rates have been in a falling trend for what, 20 years now? I find it laughable every time all the people come on with their scare tactics about inflation and rates zooming higher! Its not going to happen. Sure there is inflation out there and there has always been but every time central banks raise rates, they invariably drop them the first sign of slowing growth and each subsequent time they drop them lower, until this most recent ocassion when they couldnt be dropped any lower! Sure rates will rise a bit, but then they’ll fall again! Why do people worry about it so much. The whole world recession was created by businesses and the media who decided things were slowing and a self fulfilling prophecy occured.
Mortgage rates were ‘supposed’ to be going up strongly by september, according to many experts in the mortgage business several months ago. In fact rates have been flat and even dropping again recently. The big rush to get consumers into fixed rate mortgages worked to a certain extent. For anyone still looking for a mortgage, there will be plenty of deals in both the short and medium term so dont believe the hype that things are suddenly about to change rapidly for the better in the economy – its not going to happen.
“The whole world recession was created by businesses and the media who decided things were slowing and a self fulfilling prophecy occured.”
Alan, perhaps you can explain why exactly did businesses and media do this?
Also, where exactly does “…the hype that things are suddenly about to change rapidly…”, come from?
If it comes from the media and “…its not going to happen”, then why is that that their magical powers to control the course of the world’s economy no longer works?
Thanks in advance.
just dont believe all the rubbish thats written. Thats my point. Got to make one’s own mind up and that requires putting aside most of the sensationalist stories.
Agreed. The MSM is not in the news business. “News” is simply the raw material they use to manufacture their product.
There is a concept in financial markets called “random walk.” It applies just as much to interest rates as it does to the stock market. The random walk theory advises that people should forget about trying to be right about interest rates. Simply plan for the worst and hope for something better. That’s all an intelligent person can do!
planning for the worst would have resulted in people locking in 5.4% a year ago for five years
so I’d have to disagree