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Bank of Canada Announcement – rate increases unlikely for a while – September 8, 2021 as heard on News 95.7

Clinton chats with News 95.7 host, Todd Veinotte about the Bank of Canada announcement to hold the key overnight rate. Clinton and Todd discuss how rate increases are unlikely to happen, at least for a little while.

Bank of Canada Announcement – September 8, 2021 as heard on News 95.7

Good news if you’re in a variable-rate mortgage

Todd Veinotte: [00:00:00.15] All right, now we’re going to chat with Clinton Wilkins, our mortgage guru. We’re going to talk about the Bank of Canada interest rate. It’s the same old, same old rate Clinton?

Clinton Wilkins: [00:00:08.97] I mean, same old, same old, but great news, Todd, really.

Todd Veinotte: [00:00:11.82] Yeah, good news. If you’ve got a mortgage in variable-rates and you’re carrying some debt, right?

Clinton Wilkins: [00:00:19.44] I 100 per cent agree. And I think the outlooks from economists is pretty positive as well for anybody who’s in a variable-rate mortgage or a home equity line of credit, or maybe if they have any unsecured debt that is connected to the key overnight rate, you know, rates staying the same. And I think that’s great news for Canadians.

We have a lot of rebuilding to do, Todd. I think sometimes we forget because we’re almost in this little micro-economy in Nova Scotia. And, by and large, a lot of people made out of the pandemic financially quite well. And I’m not saying that everyone did, because you and I both know there certainly have been job losses as well as there are certain industries that have been very negatively impacted here in our province as well.

Rate increases unlikely for a while

There are certainly a lot of rebuilding to do, and I think with the government keeping that key overnight rate low, in terms the prime rate will stay low, you know, for the coming months and hopefully years, it’ll give a little bit of a head start to people that do, you know, obviously have a variable rate mortgage or any other credit facilities that are tied to the prime rate.

Todd Veinotte: [00:01:24.36] So the Bank of Canada, for those of you who don’t know, is keeping its key interest target on hold at 0.25 per cent, maintaining its quantitative easing program at its target pace of $2 billion per week. So the long term projection is that we’re not going to see any hikes anytime soon. Is that what you’re thinking, Clinton?

Clinton Wilkins: [00:01:42.69] Some economists are saying we may not see any hikes for years. So some, and these are obviously the outliers, are saying that it could be up to five years before we start really seeing some increases. And a lot is going to have to do, you know, they’re going to keep an eye on the inflation.

Inflation report in October will be interesting

Now, the Bank of Canada meets again in October, and in October they’re going to release the last monetary report of the year. And I think that’s going to be an interesting one to watch. So it’ll be interesting when we’re on this call again in about six weeks’ time on what they release in terms of what the inflation has been. During the pandemic the inflation was actually negative at one point, and it’s still below where the target is that they want it. And that’s part of the reason that they’re keeping this key overnight rate low. So I think that’s going to be something interesting to watch.

Some economists are saying that the overnight rate is going to stay low for the next 18 months or so. I think that still provides a lot of confidence for borrowers. And really, that’s part of the reason that they’re keeping this rate low. They want consumers to spend money, they want them to spend money and put that money back into the economy. You know, there was a period there where people weren’t really transacting, and I think that’s obviously impacted a lot of businesses, but they want to really build the consumer confidence again. And I think having access to credit at a low rate, obviously it’s helping.

Todd Veinotte: [00:03:04.57] All right, and we can talk more about this, obviously, when we record our podcast later, the radio show, which is going to be a News 95.7 this weekend, right?

More to come in the Mortgage 101 show

Clinton Wilkins: [00:03:12.58] That’s right. We’re going to be on Saturday and Sunday. It’s an hour show. And, you know, if you have anything that you want us to talk about during the show, feel free to send Todd a message, feel free to send me a message and we’d love to talk about, you know, any of your topics. Obviously, we’re going to be talking about fall, you know, falls literally right around the corner.

And normally, fall isn’t the busiest real estate market of the year here in Halifax, but I think it’s going to be interesting. There’s more inventory coming on the market now than there has been in the last months, and I would say even a year and a half. So it’ll be interesting just to see what happens coming into the fall. I think there’s a lot of confidence here, but I think we will really see probably by the middle of September what happens with the phase five reopening and how that impacts, you know, the real estate market?

The one good thing, Todd, is the rates are still low. And you know, for anyone who currently is a home owner, they’re really benefiting from these increases in the property values, whether you’re going to sell or whether you’re going to refinance, we’ll certainly talk all about that, and I’m sure we’ll talk about the Bank of Canada as well.

Todd Veinotte: [00:04:16.03] You got it. Thanks Clinton and chat in a couple, or tomorrow, and we look forward to putting our show together for the weekend. Thanks a lot.

Clinton Wilkins: [00:04:24.94] Sounds good. Thanks, Todd.

Todd Veinotte: [00:04:25.93] All right. Take care. That’s Clinton Wilkinson, our mortgage guru. And as mentioned, you can listen to Clinton and myself on Saturday at 11 o’clock and on Sunday at noon following Niki Jabbour show, of course.

If you have any questions, get in touch with us at Clinton Wilkins Mortgage Team! You can call us at (902) 482-2770 or contact us here.