According to the report, "the Bank of Canada (BOC) is expected to keep its key overnight rate at 1 per cent until the middle of 2015." The report also states that, while some of the usual factors like employment, economic growth, and inflation will be taken into consideration, they are unlikely to have any major impact on the rate.
The report highlights that the US Federal Reserve's decision to start reducing their bond buying program will be a major influence on Canadian mortgage rates in the near term. The US Fed's recent announcement that they will eventually reduce their bond-buying program has caused many investors to look for alternate investment options outside of the US market. As a result, Canadian mortgage rates have seen an increase due to the influx of foreign capital.
AMP Canada has also taken the current economic situation into account when predicting the future of mortgage rates. They expect that the housing market will remain strong and that demand for mortgages will remain high. This will help to mitigate any potential increases in mortgage rates. However, AMP Canada also states that any further deterioration in global economic conditions or geopolitical uncertainty could lead to higher rates.
In summary, AMP Canada's Mortgage Rate Outlook for the remainder of 2014 suggests that interest rates will remain low in the near term, as the Bank of Canada is predicted to maintain their overnight rate at 1 per cent until at least mid-2015. Furthermore, while domestic economic indicators such as employment and economic growth are unlikely to have a major effect on rates, the US Federal Reserve’s decision to start reducing their bond-buying program has affected mortgage rates. Canadian mortgage rates have risen as foreign investors search for other investment opportunities outside of the US market, although it is expected that the strength of Canada’s housing market will help to limit any rate rises. AMP Canada also warns that any further deterioration in global economic conditions or geopolitical uncertainty could lead to higher rates.
This article was contributed on Oct 18, 2023