By looking at both current and past economic conditions, they provide an insightful explanation of how fluctuations in the markets can directly impact a consumer's ability to access funds.
In order to better understand the impact of the market on borrowing costs, the article first examines the relationship between the Bank of Canada's key lending rate and consumer interest rates. It explains that when the Bank of Canada increases their rates, lenders will also increase the interest rates they offer to consumers since it is more expensive for them to borrow funds. When the Bank of Canada lowers their rates, lenders will also likely lower their rates since it is cheaper for them to borrow money. This means that when the Bank of Canada's rate changes, it has a direct effect on the borrowing rates offered to consumers.
The article then explores how other market-wide economic factors can also play a role in influencing borrowing costs. It explains that when there is an increase in inflation, lenders will increase their interest rate since inflation reduces the value of money over time. Additionally, when the economy is growing quickly, businesses are more willing to take on debt which can make it more difficult for consumers to access funds. Another market-wide factor that can have an impact on the cost of borrowing is the availability of cash in the current financial system. When there is an abundance of cash available, lenders are more likely to offer cheaper rates. Lastly, when there is high demand for credit, lenders can increase their rates in order to maximize profits.
Overall, the article provides an insightful look into how the market and economic conditions can impact a consumer's ability to access funds. As the article states, “It is important to remember that the cost of money is affected by many different factors, and these affects may be hard to predict." In order to ensure consumers can get the best possible deals on their loans, they should stay up-to-date on economic trends and understand past market behavior. By doing so, they can better understand how the market can influence their ability to access funds and ensure they are taking advantage of the best borrowing rates available.
This article was contributed on Dec 02, 2023