There’s the long term mortgage rate outlook and then there’s short term yoyo economics. The long term view is that Canadian mortgage rates will remain low for at least another year. These predictions are widely held and based on the high currency, global economic uncertainty and high Canadian debt levels. Then there’s a flurry of reactions to the latest job numbers, housing starts or whatever other tidbits Statistics Canada is offering up.
In its latest update, Statistics Canada revealed that the Canadian economy contracted by 0.2% in February, according to a report released Monday. This anemic result is a surprise to market followers and contradicts the Bank of Canada’s 1st quarter prediction of a 2.50% expansion. Any tough talk by Mark Carney cautioning Canadians of looming mortgage rate increases suddenly seems impotent. Back to the long term mortgage rate outlook, at least for this week. Don’t worry though, there’s an unrelenting supply of fresh economic indicators to confuse the myopic.
Don’t get me wrong, economic results help paint a picture of the state of our nation and hint at the health of the months ahead. Just don’t take any one release too seriously. The Bank of Canada will not adjust interest rates based on a short term outlook. The long term mortgage rate outlook remains, for now, steady as she goes for the next 12 months.