Friday, January 15, 2010

Low interest rates to stay for a while.

Bank of Canada won't raise interest rates to cool housing - "Existing-home sales are up 73 per cent year-over-year, while prices have climbed nearly 20 per cent as buyers take advantage of historically low interest rates to finance purchases.

Those who fear a bubble worry that many people are taking advantage of cheap money to buy homes they wouldn't be able to afford once rates rise, leading ultimately to a crash in prices.
Mr. Lane said the bank understands the concern, but it uses its lending rate to keep inflation in check for the whole economy and the housing market is “only one of several factors” that influence inflation."

Those who are riding the variable rate can pad their bank accounts a little longer. Keep your eye on the interest rate though and lock in before the ride starts keeping you up at night.

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