Canadians in the market for a second mortgage or home equity loan should be cognizant of the Bank of Canada’s upcoming policy meeting on September 8. At its policy meeting, the bank’s governors will decide whether or not to hike its market-setting interest rate 0.25 percent, as most analysts have expected, or whether to let sleeping dogs lie so that the economy can digest the wealth of this summer’s domestic and global economic news, particularly worse-than-expected economic news about a sputtering U.S. economy.
Reuters reports that “(a) rash of disappointing data in Canada and the United States in recent weeks has deflated rate hike expectation and also put the Canadian dollar under pressure.” Reuters notes that the Canadian dollar has retreated from near-parity with the U.S. greenback, and that “the Canadian dollar’s retreat could be a factor in the upcoming interest rate decision.”
Whereas a month ago there was considerable unanimity that Canada’s central bankers would continue with a series of rate increases that has seen the Bank of Canada’s lending rate move in two earlier decisions from an historic 0.25 per cent to its current 0.75 percent, now the possibility of a further rate hike to 1.0 percent on September 8 is less certain.
“Markets are pricing in just shy of a 30 percent chance that the Bank of Canada will raise rates at its Sept. 8 policy meeting,” according to Reuters, relying on its calculation of yields on overnight index swaps.
For Canadians weighing decisions of when, and if, to take out a second mortgage or home equity loan – be it for investment purposes, home renovations, or plain Jane debt consolidation – consulting a trusted mortgage broker with access to a wide network of non-bank lenders can help settle the if question. For those who have already decided to proceed, however, recent waffling by economists indicates a further rate increase by the Bank of Canada on September 8 is still far from a done deal.
