An influential international body is urging Canada’s central bank to raise interest rates in the fall, and continue doing so through 2013 to cool housing prices and contain inflation.
The Paris-based Organization for Economic Co-operation and Development’s prescription for monetary policy will stoke the already hot debate about whether the Bank of Canada’s interest rate stance is inflating a housing bubble.
Governor Mark Carney and other officials say the days of ultra-cheap money are coming to an end, although they so far have declined to be more specific. The OECD, a high-powered economic research group backed by contributions from its 34 rich country members, offers a scenario: An increase in the benchmark rate of a quarter of a percentage point in the autumn, and similar increases each quarter through to the end of next year, leaving the benchmark overnight target at 2.25%.
That still would be low by historical standards, yet, according to the OECD, likely a big enough increase to cause prospective homeowners to think twice before buying at current inflated prices. But the OECD’s recommendation comes with a risk.
Today’s Mortgage Rates… 3 year fixed: 2.94% 5 year fixed: 3.19% 10 year fixed: 3.89% Free Down Payment: 4.73% Variable: 2.85%
Cory Kline (Mortgage Advisor from Neighbourhood Dominion Lending Centres)
705-794-1283 or Cory@ndlc.ca