How will unchanged interest rate affect housing market?

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OTTAWA (NEWS1130) – The Bank of Canada is keeping its target interest rate unchanged at one per cent, but it says little else in the global and Canadian economic outlook is stable.  The central bank says the global economy is slowing and Europe may actually fall back into a brief recession.

The bank says the economy is now expected to have grown by just over two per cent when all the data is in for this year, but next year is expected to be much tamer.

Professor Tsur Sommerville at the Sauder School of Business says the move may give some people a confidence boost.  “To some extent that may manifest itself more to what kind of mortgage they get, rather than dramatic changes and conditions in the market.”

He adds prices have been relatively flat in the market for the past five months.

“Compared to what was happening in the early part of 2011, things have really settled down a lot both on the sale side and particularly on the price side.  One way they could come down is by being flat for a long time or growing more slowly.  It doesn’t have to be like the stock market where overnight there is some large correction.  The housing market doesn’t usually work that way.”

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