A recent Canadian Press report highlights a number of economic fundamental trends that are worth further consideration.
Canada is in a unique position compared to the rest of the G8 as well as the majority of other countries aside from the BRIC perhaps.Our resource rich country has been booming the past 18 months, leading the charge on a commodities boom. Of course, look a bit deeper and you will see an economy of two very different stories. With the dollar above par, the manufacturing sector in Ontario is feeling the burn.
Despite a headline rate of inflation creeping towards 3%, the BoC held their ground on interest rate hikes and indicated a rise in the benchmark rate might be further out than most people expect.
This continues the trend of the variable rate mortgage being the winner in the game of interest rates. You shouldn’t be surprised however, we’re pushing 35 years of the same story on that front.
With the dollar trading today at over $1.035 per USD, any increase in the Canadian rates will likely result in higher currency values as well. Further, if you haven’t already felt it, the economy has cooled off a bit the past few weeks and that trend is likely the remain the norm.
Let’s not forget the end of $50 – $100 billion per month the US Federal Reserve is monetizing, coming due mid-summer. With a US political climate focused on
fiscal conservatism south of the border, we can only hope the same will rub off on some of the Canadian consumers who have amongst the worst debt-to-income ratios in the developed world.
If you own your own home and are struggling to make ends meet (who isn’t?), consider taking out a second mortgage, on your property to consolidate your unsecured payments and improve your cash-flow by hundreds or thousands a month. Scared off by 15% rates and expensive fees? The reality is that a qualified mortgage broker can obtain a rate for you as low as in the 4s and with costs that absolutely make sense.
Make sure you ask for a full disclosure of all related fees upfront, and walk away from anyone who won’t provide full transparency.
