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The Only Direction Canadian Mortgage Interest Rates Have to Go is…


Canadian mortgage interest rates have been the source of serious speculation over the past year. This has largely been a result of economic instability created by an embattled oil market. While some areas of the economy have benefited from a weaker Canadian dollar, of course others have not.

Canadians continue to carry record levels of debt. In a recent report covered in the Financial Post, Canadian household debt was stated to be the highest in the G7. In the third quarter of 2015, Canadian household debt reached 171% of disposable income – or debt obligations of $171 for every $100 of disposable income. This is the highest it has been since 1990 and the number is only expected to grow. You can read more about that report here:

This, combined with sustained smoking hot real estate markets in Canadian urban centres like Toronto and Vancouver, have led to CHMC making changes to its rules in an attempt to protect over-reaching consumers and the vulnerable Canadian economy. This has led many to wonder, with each new reporting cycle, what the BOC will do with continually low interest rates.

In January 2016, the Bank of Montreal joined other banks predicting another rate cut, stating low oil prices and weaknesses in the Bank of Canada’s business outlook survey as the 2 main reasons that perhaps the BOC is considering chopping Canada’s lending rate again. Read more on this here:

However, in January, March and April, the Bank of Canada kept Canada’s interest rate at 0.5%. This interest rate has remained the same since the last time it was cut in July of 2015.

It seems that the key to predicting which way interest rates will go lies with knowing which way oil prices will go. The good news is that websites such as are reporting that, despite continually low prices, Canadian output of oil is projected to increase: This seems to be in like with an April of 2016 CBC article which reported that, in a recent Deloitte analysis, oil prices are forecasted to increase:

The question is, what would you like to see happen with Canadian interest rates? Is another decrease a smart measure – would it help or hinder your clients in the long run?

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