"The fact is we're three years in to the global financial crisis and its dynamics still dominate the economic outlook." – BoC chief, Mark Carney
The question everyone wants to know is: How long will that be true? The answer, which is as ambiguous as ever, has a direct bearing on the mortgage rates.
As always, we can count on the “professional predictors” to have an opinion. Here’s a sampling of what they’re saying now, following a week that brought the third consecutive BoC rate increase and an anemic employment report.
The economy will have to worsen further "to prompt the central bank to stop raising rates." – BMO Capital Markets, deputy chief economist, Douglas Porter (Ottawa Citizen)
“…The (Bank of Canada’s) language suggests the bank may pause longer than merely the next meeting or two." – BNY Mellon strategist, Michael Woolfolk (Global)
"In our opinion, the odds favour the Bank of Canada pausing for some time…TD Economics does not anticipate another tightening before March of next year." – TD Chief economist, Craig Alexander (CBC)
“…The bank (of Canada) doesn't know what it is going to do.” – CIBC World Markets Chief Economist, Avery Shenfeld (Vancouver Sun)
“…Rates are low and likely to rise at only a gradual pace in the next 18 months…” – TD Chief economist, Craig Alexander (Globe & Mail)
Do you get the sense that no one really knows where rates will be 12 months from now? If so, you’re right.
But that matters less than one might think. TD’s Craig Alexander told the Globe’s Rob Carrick this week: “Rates are remarkably low by historical standards. People get so hung up on the direction of interest rates. The level matters.”
Translation: Today’s 3.59%-3.79% five-year fixed rates are manna from heaven. So are 2.90% three-year fixed rates and 2.30% variable rates.
Rates are so good in general that most people don’t need to drive themselves to insanity while choosing between fixed or variable rates. As long as you don’t borrow over your head, your finances won’t be decimated by making the wrong choice.