Lending Rates Hold at Historically Low Levels. Mortgage and Consumer Lending Stays Cheap Money, Could go Even Lower.

Mortgage and lending rates should remain relatively steady over the short-term as Bank of Canada governor Mark Carney decided to hold the benchmark lending rate at 1 percent today. Borrowing costs should remain low, hopefully spurring the purchase of more housing and other big ticket items like cars by Canadians. This is good news for anyone shopping for a home or investment property soon, and anyone who has existing variable rate debt. 


In the Globe and Mail today, Mark Carney is cited as saying:

“In light of slowing global economic momentum and heightened financial uncertainty, the need to withdraw monetary policy stimulus has diminished.”

“The Bank will continue to monitor carefully economic and financial developments in the Canadian and global economies, together with the evolution of risks, and set monetary policy consistent with achieving the 2-per-cent inflation target over the medium term.’’


In layman's terms, the global economy is doing worse than expected, and trouble in Europe and the United States is forcing Canada to keep stoking its economy to encourage domestic spending and consumption.


Most importantly, the door has now been left open for the Bank of Canada to actually cut interest rates going forward instead of raise them... money is cheap and in Canada it might just get even cheaper : )


Please post or e-mail me your comments and questions.
Matthew J.W. Clarke.

Interest Rates to Remain Low. Cheap Loans Will Continue for the Near-Term. More Variable Rates and Inflation the Result.

Yesterday's news from the federal reserve that interest rates will remain low for two years provided a sigh of relief for investors and those looking to buy homes over the next little while. 


According to the Globe and Mail:


"High unemployment, tapped-out consumers and a depressed housing market led the Federal Reserve to say Tuesday that the outlook for recovery in the world’s largest economy is now so tepid that short-term interest rates will probably remain at emergency, near-zero levels until mid-2013."


The Federal Reserve initially lowered rates to the 0 - 0.25% level following the financial crisis in 2008, but the elusive recovery has caused rates to remain largely unchanged since that time. With two more years added to the low rate environment, the markets now have some degree of certainty regarding the Fed's decisions going forward, and an assurance that cheap money will be plentiful for investors and home buyers in the near-term.


What's the move for those thinking of buying real-estate any time soon? In the current interest rate environment, consider variable rates to save you some cash as any raise in rates going forward is becoming unlikely. And for investors? Be very wary of holding cash as inflation is sure to eat away at your savings quickly. 


For more from the Globe and Mail:


http://www.theglobeandmail.com/report-on-business/economy/interest-rates/fed-promises-two-years-of-low-rates/article2124029/


Happy Investing and contact me if you have any home buying or financial questions.

Canadian Real Estate Attracting More Chinese Investors. Real Estate Agents and Developers Target Mainland China.

Condo developments in Vancouver are selling out in mere hours as thousands of Chinese immigrants and investors are using them to make and store their money. Smart local real estate agents and developers are targeting people in mainland China in the hopes of attracting some of their capital as many Chinese citizens are becoming enamoured with the concept of real estate development and ownership. By including Chinese-specific media and targeting their marketing at mainland consumers, western-Canadian condominium developers are making a fortune. 

According to Landcor Data Corporation, an astounding 74 percent of buyers for recent luxury developments in Richmond and Vancouver were from Mainland China. Many of the investors do not even rent out or live in their units, preferring simply to leave them vacant as a store of value in a country and region that they see as safe, reliable, and politically stable. 

Toronto also is attracting significant foreign investment in real estate. A recent Etobicoke development called Westlake was largely snapped up by Mainland Chinese investors. To attract more investment, a number of realtors are opening offices in Beijing and Hong Kong to be closer to their target markets. 

For more information on this topic, check out the Globe and Mail.

Happy Investing : )