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Mark Carney: Mortgage Rate Increases “Less Imminent”

Mark Carney has been blamed in the past for using confusing language regarding mortgage interest rates. One month he says they’re going up, the next he’s talking about how they need to remain where they are for the time being. But, in an effort to always clear up any confusion Canadians have over the rate the BoC sets, Mr. Carney gave an interview last weekend, in which stated in no uncertain terms, that interest rates are going to stay right where they are. At least for a little while.

Speaking with the National Post last Saturday, Mark Carney stated,

“Over time, rates are likely to increase somewhat, but over time, so a less imminent timing relative to our expectation.”

That expectation of course, was that the U.S. was finally starting to recover from the recession, and the crisis in Europe seemed to be contained. But, then things in Europe worsened, and the U.S. took a very small hit as well, seeing slight declines in their housing market; and now, the fiscal cliff that looms just about six weeks away. However, Carney also pointed to risks at home; or at least, the biggest one that the country has seen in the last couple of years – household debt.

“We’ve been very clear in terms of lines of defense in addressing financial vulnerabilities. And the most prominent one obviously, in Canada, is household debt,” he said.

That debt, which now sits at a 163% threshold,  does put us at greater danger, especially considering that up until just recently, we’d been living with the idea that we were actually at about a 152% ratio.

The BoC governor also mentioned in the Post interview that the Bank, as well as the federal government, were keeping a very close watch on the mortgage rule changes – all four sets of them in the past four years – to see how that curtails spending, and helps us to reign in our debt. And it’s just those rules that so many Canadians have been complaining about, that allow the Bank to keep their interest rates at the historic lows they’ve been at for over two years.

Without them, we’d still be scooping up properties (some of which we couldn’t afford,) and Mark Carney would be forced to raise the interest rates in order to curb that spending. This way though, the Bank can keep its stimulus to keep the spending going on at a time when the country needs it the most – and continue offering those super low rates to qualified borrowers.

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