A November 9th, 2011 article suggests that a group of Canadians could be in a load of trouble if mortgage rates increase…
While some Canadians might find it challenging to afford significant increases in mortgage rates, the truth of the matter is that mortgage rates are likely not on the rise any time soon…in fact, mortgage rates may actually stay flat or even drop in the next two years.
Of course, there is a reason for the belief in the drop of mortgage rates; mainly being the crisis of sovereign debt in Europe. The Eurozone events have become the forefront of most of the world’s concern and it is likely that inflation will not be a factor in swaying interest rates.
Scared investors often mean that money doesn’t switch hands and is held, effecting the economy adversely. Typically, interest rates do not rise when economic sentiments and perceptions are negative. Governments look to encourage spending with lower interest rates – raising rates has the complete opposite effect.
In the opinion of MonsterMortgage.ca agent Roy Cocciollo, we can expect that mortgage rates will be at historical lows for some time. There is in fact a great positive in such rough economic times however – the low interest rates offer a tremendous opportunity for you to pay off your debts, mortgage or otherwise, a priority in the coming year. Bank Of Canada Governor Mark Carney has been a vocal supporter of decreasing Canadian household debt as far back as 2009.
Of course, as Christmas season revs up and the tempation to splurge on Boxing Day grows, do your best to avoid tacking on any more debt on those high interest credit cards.
Of course, there are other ways to spend your money; channels of investment like stocks, bonds and GICs also exist. The catch; these vehicles are either risky (ask those in the stock market) or offer very little in terms of return (ask those earning 1.25% interest on their GICs). While you might be able to generate 2-3% returns on a safer investment vehicle – paying off your credit cards with a 20% interest rate gets you a greater return on your dollar. Focusing on eliminating debt is a priority that should take the forefront for Canadians in 2012 as we look to tackle record levels of debt, and avoid becoming a nation over leveraged by debt.
Makes ‘cents’ no?BACK TO NEWS FEED