Gas Prices Inching Up – Could We be Headed for a BOC Rate Increase
Fluctuating economy conditions create a well-known international financial domino effect. When market conditions show negative response to fluctuations, one of the adverse effects the economy bears is a tightening of credit conditions. From there, a financial domino effect can create a larger economic instability, which, in turn, can have dramatic impact on housing markets.
Let’s look at a recent chain of events that began overseas and ended up impacting the housing market within Canada:
- Earlier this year gas prices dropped to lows not seen in years, to well under a dollar. This resulted in our own dollar sinking.
- This drop then resulted in the BOC deciding to take measures to protect the economy by lowering interest rates.
- In January 2015, the BOC reduced the country’s lending rate by .25.
This only fueled an existing rate-war between mortgage lenders.
Think about how this chain of events has impacted your overall business these last few months. Did you witness an increase in business as a result?
Now that gas prices have inched their way back up, what’s next for the Canadian economy – specifically housing and other domestic economic contributors? Some believe that increased gas prices spell a rise in the value of the Canadian dollar, which would then prompt the BOC to feel confident enough to increase interest rates.
However, this line of thinking is based on the assumption that the only factor impacting the BOC’s monetary policy is the price of oil. This isn’t the case. So how CAN we predict what will happen next?
If you are a real estate sales professional who pays close attention to the economy, we’re interested in your predictions for Canadian interest rate activity through 2015. As many believe that recovery from the 2008 recession remains one of this past century’s most difficult, how much more complicated would that make any further economic instability?
Regardless of how interest rates may fluctuate, GeoWarehouse remains a steadfast tool for your real estate due diligence. Remember, GeoWarehouse is the premier, online due diligence tool for viewing property ownership history, comparable sales, value, home ownership, and registered mortgages, as well as obtaining condo certificates, surveys, Parcel Registers*, MPAC assessment reports and more. Call us today at 1-866-237-5937.