• Canada’s overnight lending rate dropped surprising a lot of people, me included. Robert Floris’s  Mortgage Architects office which loves to provide honest , non stressful advice to clients regarding their mortgage  was caught off guard. The article below helps in understanding why they lowered the rates. With inflation low and oil prices collapsing our growth in terms of the country growth will stall. The low growth rate will affect prices and jobs. By lowering the rates the government is hoping to help business’s  borrow to spur growth. This is telling us that mortgage rates  will remain low for the near future.  This will help for affordability in Housing. For Hamilton we are lucky as we still have good value in our housing environment. Being in the in mortgage industry for 25 years l have never seen these rates so low on fixed and variable. Let’s hope it continues, but good things usually all come to an end.

     

     

    Tax Season
    Canada’s inflation rate drops to 1.5% on cheaper gasoline
    Excluding gas prices, annual CPI rate would have increased to 2.3%, StatsCan says
    CBC News Posted: Jan 23, 2015 8:47 AM ET Last Updated: Jan 23, 2015 12:37 PM ET

    Statistics Canada attributes the lower annual inflation rate in December to an almost 17 per cent drop in pump prices over the previous year.
    Statistics Canada attributes the lower annual inflation rate in December to an almost 17 per cent drop in pump prices over the previous year. (Seth Perlman/Associated Press)

     

    Bank of Canada shocks markets with cut in key interest rate
    ANALYSIS: Interest rate cut doubles effect of falling oil price
    External Links

    Statistics Canada December CPI report
    (Note: CBC does not endorse and is not responsible for the content of external links.)
    Canada’s annual inflation rate slowed to 1.5 per cent in December, down from two per cent in November, as the plunging price of gasoline again helped to rein in the cost of living.

    The inflation rate hasn’t been that low since March.

    Statistics Canada attributed the lower rate mostly to an almost 17 per cent drop in pump prices.

    To underline that point, the agency reported that if gas prices are excluded from its calculation, the annual consumer price index (CPI) rate would have increased to 2.3 per cent.

    Consumer prices rose in seven of the survey’s eight major categories, with only transportation declining.

    Gasoline prices across the country are continuing their drop this month.

    The latest weekly survey from Calgary-based MJ Ervin & Associates showed the average price for a litre of regular gas was 91.3 cents a litre as of Tuesday. A year ago, it was $1.34. That will put further downward pressure on overall inflation.

    January’s CPI figures will be released Feb. 26.

    Inflation to fall further

    The Bank of Canada said the slumping oil price was the main reason behind the surprise interest rate cut Wednesday.

    The central bank said lower crude prices posed a threat to economic growth and its inflation target. It forecast that the country’s annualized inflation rate would drop to just 0.3 per cent in the second quarter.

    Statistics Canada said the cost of living in December rose year over year in every province except Prince Edward Island, where the CPI fell 0.4 per cent.

    The core inflation rate, which excludes such volatile items as gasoline, rose slightly to 2.2 per cent year over year. It had been 2.1 per cent in November.

    “Looking past the dramatic dive in gasoline prices, there is precious little indication that underlying Canadian inflation trends are being dragged down by the plunge in oil prices,” said BMO chief economist Douglas Porter in a commentary.

    “On the contrary, core inflation appears pegged above the two per cent threshold for some time yet, especially with the upward pressure from a weakening exchange rate.”

    On a monthly basis, overall inflation fell 0.7 per cent in December.
    Robert Floris is a mortgage planner  based with Mortgage Architects in Hamilton Ontario

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