Bank of Canada signalled Wednesday it won’t be raising rates — its neutral stance could even mean lower rates.
The possibility of long-term rate reductions has people worried the market may be recovering too fast for the taste of Ottawa, leaving Finance Minister Jim Flaherty with no choice but to tighten lending rules again.
Experts in the industry say it’s possible interest rates will go down, adding there’s a huge amount of mortgage debt already in the pipeline that was created when people took advantage of rates they were pre-approved in the summer.
With no panic to buy now that there is no pressure to raise interest rates, the question is whether people will be encouraged to continue to take on more debt or slow down their spending if the economy slows?
It is believed that Ottawa is already talking about more restrictions to the mortgage industry if there isn’t the expected softening in the housing market . It would be their only option to slow things down if the Bank of Canada remains reluctant to raise rates.
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