Variable mortgage holders can rest easy knowing that their mortgage payments are not expected to increase any time soon. Once again the Bank of Canada announced that they will leave the target overnight lending rate constant at 1%.
This means that Prime rates will also stay the same and therefore variable mortgage rates.
The Bank of Canada stated the following reasons for holding the course:
- The debt crisis in Europe is intensifying
- The recession in Europe is expected to be worse than originally thought
- This will dampen global growth and particularly expansion within the US.
- The US housing market is showing no signs of recovery
On a positive note, the Bank of Canada announcement also referred to slightly better than expected growth in the US due to consumer spending and business investment. Growth in China and other emerging-market economies continues to be strong.
Here in Canada, things are surprisingly good. Economic growth in the second half of the year is expected to be slightly higher than forecasted. But we are not immune to the activity going on across the ocean and only time will tell just how much of an affect the crisis in Europe will have on Canadians.
The Bank of Canada meets again on 17 January 2012 for the next interest rate announcement.