No News is Good News!

March 7, 2007

Yesterday the Bank of Canada decided to keep the prime lending rate right where it's been sitting for the last year pretty much. For those of us who have mortgages that float with the prime (variable rate) - this was good news. And for those of us locked into fixed term mortgages - there is no real impact since mortgages with fixed terms move with the bond market.

What's really interesting about the discussion around interest rates is how they affect the economy generally and how they impact the housing market.

I always get asked, "What about the real estate bubble? When's it going to burst" I get asked this question often. I am not an economist but I do feel that market conditions are very stable. We are likely to see slower growth than say 4 or 5 years ago, but steady growth nonetheless. The Canadian Economy is stable; unemployment is low (relatively speaking), and interest rates are steady.

If the population of the GTA continues as forecast, then investing in real estate especially with the low cost of borrowing is a great idea!

So when it comes to interest rates - no news is good news - for now!

Sam