Bank of Canada continues to hold the prime rate
The Bank of Canada held the prime rate once again. This was expected as our economy continues to struggle with the pandemic. The BOC is seeing gains in certain areas of our economy as businesses continue to try and get back to any sense of a normal operation.
Manufacturers are beginning to ramp up their inventories again. A large factor in play is the constant inability to control the virus. It continues to restrict the reopening of businesses across the country.
Our unemployment is still close to record highs and the BOC wants to see those jobs come back before looking at raising interest rates. Until we see solid gains in employment I bet the prime rate will remain right where it is.
The BOC does see strength in all sectors and estimates things will improve for the latter half of 2021. In the meantime, we just hope a third wave does not take hold due to the variants of the virus. Further lockdowns will only hurt our economy.
The real estate business is seeing busy times
The real estate market across the country is on a strong run. Folks are tired of living in a confined space and are looking to change their settings. Along with low-interest rates, and low inventory the demand for housing is great.
Markets across the country are reporting record sales and lots of activity. In some areas, it has become a seller’s market. This has not happened in places like Alberta in many years. It is a nice surprise for all of us.
Fixed Interest rates are climbing fast
In the last two weeks, we have seen the 5 year fixed rate climb from 1.64% to today’s rate of 2.19% for a 5-year insured mortgage. That is a .55% rate jump in less than 3 weeks.
We had little indication that the jump would be as high as it was. With the bond markets rising we did expect that fixed rates would jump.
There is a theory that the banks are taking advantage of the bond market to increase the rates in anticipation of the spring real estate market rate wars.
May and June tend to be busy months for the real estate market. This is a time when lenders come up with great interest rates to try and win some extra share of the marketplace. By raising rates a little higher now, it gives them some room to drop again in the busy season.
We will have to wait and see if this theory holds true this year.