Change will help home ownership
OTTAWA, March 4 /CNW Telbec/ - The interest rate cut announced today by
the Bank of Canada will help Canadian home owners and buyers, according to The
Canadian Real Estate Association.
The Bank of Canada cut its benchmark overnight lending rate by one-half
of one percentage point to 3 1/2 per cent on March 4th, and signaled further
cuts in the near future. The trend-setting Bank rate, which is set
0.25 percentage points above the overnight lending rate, now stands at
3.75 per cent.
"The threat of inflation is being eclipsed by concerns about slower
economic growth, so the Bank of Canada cut its trend-setting bank rate to
boost growth," said CREA Chief Economist Gregory Klump. "Financial market
turmoil will remain a downside risk to growth for some time. This means the
Bank will probably continue lowering interest rates."
Lower lending rates will help offset the effect of tightening credit
conditions and allow homeowners to obtain better mortgage terms. This will
also benefit Canadian homeowners dealing with variable rate mortgages.
"The Bank of Canada today acknowledged that the U.S. economic slowdown
was likely to be deeper and more prolonged than it projected less than six
weeks ago," said CREA President Ann Bosley. "When the Bank decided to lower
interest rates today, the advertised five-year conventional mortgage rate
stood at 7.29 per cent. This is less than one per cent above where it stood at
the beginning of last year. Competition among mortgage lenders remains stiff,
which continues to help many borrowers negotiate discounts from advertised
Declining interest rates and a rebound in economic growth are factored
into the CREA MLS(R) 2008 market forecast. "MLS(R) sales activity will stay
strong and reach the second highest level on record this year. Residential
MLS(R) prices are also expected to continue rising. Additional cuts to
mortgage interest rates are good news for housing affordability and Canadian
housing demand," Klump added.
For further information:
For further information: Gregory Klump, CREA Chief Economist, (613)