The tip of Canada announces a new interest rate hike! The recent dollar gain of the Canadian dollar may not have been the worst thing for the Canadian economy or the beat either. As the dollar hit a 30 year record high closing just short of.94 cents USD it has become bad news for home owners and also for the rapidly changing mortgage industry.
Is there justice left in our economy when the tip of Canada reacts pre-empt by raising interest rates in order to contend and minimize inflation? This is the same justice that provides us with a mortgage and gives us the accessibility for more people to become home owners. Lets look at some recent figures:
The interest rate hike should not come as a shock for Canadians as a pattern of increase could be seen in the last 4 weeks amounting up to a rate increase of 7.44 percent for a 5-year closed mortgage that will take effect June 15. 2007 at all study banks.
The new posted interest rate of 7.44 percent is a rapid jump from 6.59 percent which was as of last May 17. 2007. Thats an interest evaluate move of 0.85 percent in only 30 days.
Interest rates could be seen rising since last month especially in the bond market where yields were being scared into rising ever since the central bank announced its intend to hike interest rates to contend inflation and maybe even more than once this year.
The recent gain in the value of the Canadian dollar just closing short of.94 cents USD has contributed more harm than good some analysts say.
According to Dodge the recent risk of increased inflation in the future and the unusual go in the Canadian dollar are the main reasons for this interest rate hike.
Most Banks have not waited yet for the future interest rate hikes and have already started to jump their rates to record 5 year highs.
According to the Canadian Real Estate Association this new interest rate bring up has not entirely deterred Canadians from buying homes. A recent study shows that the average sale price in urban markets was $333,524 last month. 10.2 per cent change magnitude from a year ago and the highest ever.
With the ever rising interest rates at 5 year highs the housing market is still expected to survive and remain strong according to the CREA. This ordain mean more mortgages and economic buying cater ordain increase in stats over the desire term and we will see a more prominent and visible reaction to this in especially the Western Canadian markets.
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