Agent Will

As expected by many the Bank of Canada has cut its rate by 0.5% to 3%.  What does this mean for housing?

Well, if you are currently on a variable rate, congratulations!   Your monthly payment will be lower if your bank follows suit (expected sometime soon as they generally do follow the BOC’s lead relatively quickly).

If you are out looking and have been stymied by what you want being just out of reach, well, with a bank cut by .5% you’ll be able to afford more on the same monthly payment.  Do be careful with this, though.  The rates are near their lowest ever historical point and at some point will go back up.  You do not want to be so stretched that you won’t be able to afford the payments when they do.

If you are a seller, rejoice!  The pool of buyers able to afford your place has just increased!

If you are a saver… this is a sad day for you.  Any of you using the high interest savings account such as those offered by ING or PCFinancial are about to get your interest rate cut as well.

We in Vancouver tend to look at interest rate cuts only in terms of housing.  It’s a very myopic look at things.  The BOC has all of Canada to be concerned with and this move had nothing to do with housing.  In my opinion it has been taken to compete with our neighbours to the South and help our manufacturing base in the East.  The move sent the C$ down which is something that Canadian manufacturers (and the local film industry) has been hoping for.  It’s sad to think that we need to weaken ourselves in order to feel competitive.  Jim Flaherty, finance minister, called upon manufacturers and other industries many months ago to use the strong dollar to invest in new technology and become more efficient, thereby more competitive.  I wonder how many actually pursued that route.

In any case.  Rates down.  Money is now cheaper to borrow.  Go buy something is what they are saying.

So what’s your take on all this?