Canadalend.com is weighing in on the divisive overnight rate debate, expecting it to hold at one per cent until well into 2014.
“According to one estimate, the U.S. government shutdown took at least $24.0 billion out of the U.S. economy. This equals at least 0.6% of projected annualized fourth-quarter GDP growth,” Bob Aggarwal, president of Canadalend.com said in a statement. “What this means is that depressed drivers of growth south of the border could push back the IMF’s projections to further into 2014, or even later. That said, banks have never been shy about raising mortgage rates ahead of any announcement from the central bank.”
Debate has been heated as several factions voice their opinions on when the Bank of Canada will raise the overnight rate, which has held steady at one per cent since 2010. The Bank of America has stated that it expects the rate to remain until 2016, an opinion shared by at least one big Canadian Bank. However, the International Monetary Fund expects the rate to rise in 2014, which aligns closer with Calalend.com’s predition.
“The Bank of Canada has kept its overnight lending rate at one percent since September 2010, noting it wouldn’t raise it until the domestic economy got stronger,” Aggarwal said. “With the overnight lending rate impacting variable mortgage rates, many potential home buyers have been wondering when that will be.”
According to Aggarwal, the rate still remains at a record low and he urged potential buyers to contact an independent Canadalend.com broker to lock in the rate before they are hiked.
“For first-time home buyers, it’s important to remember that while mortgage rates have been climbing, they are still relatively low,” Aggarwal said.