On May 31st, the BOC key interest rate remained unchanged at 1%. This way in contrast to forecasts of increasing rates by this summer. Yet, there are still economists predicting the BOC rate will climb to 1.75 per cent by year-end, and even reach 3 per cent by Q3 of 2012.
Higher rates were on everybody's minds as politicians and bank leaders, on both sides of the border, cautioned consumers that rates would rise. This hold on rates seems to be caused by negative stock market activities through May and now continues into June. In Canada, core inflation is within BOC's target range, and south of us, the U.S. Federal Reserve Chairman stated, that U.S. economic growth has been "somewhat slower than expected." So while some predict that fall may see rate rises, our leaders' actions, market events, employment statistics and more, likely mean no rate rise in Canada before at least year-end.
As well, it's intersting to note that in the wake of gloomy North American economics data, our Big Banks once again dropped fixed rates on longer-term mortgages by 10basis point at the start of June.
Changes to mortgages regulations, that started in April 2011, had some effect on real estate markets, but overall, the ongoing low interest rate trend should continue to bode well for the housing market.