Ravi Punia - REALTOR®

Fraser Valley Specialist

FRASER VALLEY REAL ESTATE BLOG POSTS

Low Rates Expected for a Long Time


"The Federal Reserve announced a significant change Thursday in how it manages interest rates by saying it plans to keep rates near zero even after inflation has exceeded the Fed’s 2% target level."  That was the opening of an article below that summarizes that Federal Reserve's new shift in policy, down in the United States.


US FED SAYS RATES TO STAY ULTRA-LOW EVEN AFTER INFLATION PICKS UP


There is a connection to Canada, mortgage rates and the real estate market as a result of this change in policy.  Essentially, the short-term interest rate set by the Bank of Canada is highly correlated to the rate set by the Federal Reserve in the US.  Our central bank tends to mirror the moves made down south, by our country's largest trading partner.


What Chairman Powell has made very clear is that short-term interest rates will remain very low for a very long time, even if inflation picks up beyond their 2% target.  For our local housing market here in the Fraser Valley (and Canada), this means that the outlook is for mortgage rates to remain at these very low levels for many years to come.  Low mortgage rates make borrowing money cheap and tends to be supportive of rising house prices.


With homebuyers able to borrow at historically low mortgage rates, I would expect that this will have a stabilizing effect on our housing market.  If you have a secure job or source of income, are able to comfortably afford mortgage payments, now may be a great time to be buying your next house, townhome or condo.  Money's cheap.





*This blog communication is not intended to cause or induce breach of an existing agency agreement.  Views are my own and do not reflect those of any organizations that I may be associated with.

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