BMO Economics Revises Forecast for Interest Rates-Bank of Canada to Resume Rate Hikes in July 2013
TORONTO, ONTARIO--(Marketwire - July 3, 2012) - BMO Economics has revised its forecast of the resumption of interest rate hikes by the Bank of Canada from January 2013 to July 2013.
"The half-year delay in rate hikes flows from three factors: the current and expected easing policy of the U.S. Federal Reserve, a downgraded Canadian economic outlook and the recent move to tighten mortgage rules," said Michael Gregory, Senior Economist, BMO Capital Markets.
Mr. Gregory noted that the risks to financial stability posed by housing and household debt dynamics, along with the closing output gap, were underpinning the Bank's tightening bias. "Changes to the government's mortgage insurance guidelines and housing-related lending guidelines should turn out to be more effective and efficient in dealing with these specific risks than the 'blunt instrument' of rate hikes - moves that are now likely at least another year away."
Laura Parsons, Mortgage Expert, BMO Bank of Montreal, noted that saving on interest costs over the long term should be high on the priority list for any prospective home buyer.
"While interest rates have been at historic lows, the inevitable climb will happen. Choosing a fixed mortgage can provide protection against rising rates and make the cost of owning a home more manageable in the long run," said Ms. Parsons. "In addition to choosing a fixed rate, we believe that for Canadians a mortgage that carries a maximum 25-year amortization is the right choice for today's environment, as it helps homeowners build equity in their home faster."
About BMO Financial Group
Established in 1817 as Bank of Montreal, BMO Financial Group is a highly-diversified North American financial services organization. With total assets of $525 billion as at April 30, 2012, and more than 46,000 employees, BMO Financial Group provides a broad range of retail banking, wealth management and investment banking products and solutions.
For media enquiries: