The recent fall in housing prices in Canada has made home ownership more affordable, and broad-based cuts to mortgage rates announced by Canada's major banks yesterday will help even more.

The Quebec-based Desjardins Group said that its index of Canadian housing affordability is "slowly but surely inching its way" back up to its historic average

The bank's affordability index, which has averaged 128.8 over the past 20 years, rose to 115.9 in the third quarter of the year from 112.4 in the previous quarter

read more.......

Eric Beauchesne, Canwest News Service 
Published: Thursday, November 27, 20

Wonderful thing about this business is that every day brings some new twists and ideas about real estate.

I was holding an open house last weekend and had some decent traffic. So, what are the buyers looking for? Good deals,beter prices, and as one of them said, zero interest??. What di he mean? Well he said that he thinks the interest rates will go to zero. When I questioned him as ti what he meant, he really wasn't sure what he was talking about. Who knows what news he was listening to. There is talk and speculation that Bank of Canada will reduce the rates at the next meeting on December the 8th. It could be 1/4 to 1/2 off todays prime rate of 4%. Bank of Canada rate is 2.25% and the prime is usually 1.75 above that.

So what was my visitor thinking about. Zero rate for what? He wasn't sure. Even if the Bank of Canada overnight rate got to 0%, the bank prime would be 1.75% great deal for borrowing money and mortgages, but it sure wouldn't be much good for savings and other investments. I gues  he wasn't thinking along those lines.

I think the rates  are pretty good. Anything you can get under 6%for a 5 year mortgage has always been a good deal. There is no more discounting from the bank prime rate. most lenders will ad up to 1% to the prime as a variable mortgage rates and most of them will not give you a closed rate. Still, at 5% variable, and with the rates on the way down by most accounts, it is a pretty good deal.
There are other deals out there. A good mortgage broker will find you the best options available, but make sure you are dealing with an  Accredited Mortgage Professional.

This is an interesting report by TD Canada economics department regarding the recent financial turmoil, and how the  governments and central banks responded.

Review covers global information and upcoming changes in monetary policy worldwide.

Read more here...

Press Releases

2008

Central Banks Announce Coordinated Interest Rate Reductions

Throughout the current financial crisis, central banks have engaged in continuous close consultation and have cooperated in unprecedented joint actions such as the provision of liquidity to reduce strains in financial markets.

Inflationary pressures have started to moderate in a number of countries, partly reflecting a marked decline in energy and other commodity prices. Inflation expectations are diminishing and remain anchored to price stability. The recent intensification of the financial crisis has augmented the downside risks to growth and thus has diminished further the upside risks to price stability.

Some easing of global monetary conditions is therefore warranted. Accordingly, the Bank of Canada, the Bank of England, the European Central Bank, the Federal Reserve, Sveriges Riksbank and the Swiss National Bank are today announcing reductions in policy interest rates. The Bank of Japan expresses its strong support of these policy actions.

Bank of Canada lowers overnight rate target by 1/2 percentage point to 2 1/2 per cent

The Bank of Canada today announced that it is lowering its target for the overnight rate by 1/2 percentage point to 2 1/2 per cent. The operating band for the overnight rate is correspondingly lowered, and the Bank Rate is now 2 3/4 per cent.

The intensification of the global financial crisis is having a marked impact on all countries. In recent weeks conditions in global financial markets have deteriorated sharply, the U.S. economy has weakened further, and commodity prices have fallen abruptly.

As a result of these developments, credit conditions in Canada have tightened significantly, despite the relative health of our financial institutions. Weaker growth in the United States and other important trading partners will increase the drag on the Canadian economy coming from net exports. The deterioration of our terms of trade will act to moderate the growth of domestic demand. While the recent depreciation of the Canadian dollar will help cushion the effects of the weaker global outlook on the domestic economy, it will not completely offset them.

Below-potential growth in aggregate demand through 2009, combined with a lower profile for commodity prices, will significantly ease inflation pressures in Canada. Inflation expectations remain well anchored.

In view of these developments, the Bank of Canada decided to join other major central banks and lower its target for the overnight rate by 50 basis points today. This action will provide timely and significant support to the Canadian economy. The Bank will continue to monitor carefully economic and financial developments, along with the evolution of risks, in judging whether any further action might be required to achieve its 2 per cent inflation target over the medium term.

Information note:
The Bank of Canada's next scheduled date for announcing the overnight rate target is 21 October 2008. A full update of the Bank's outlook for growth and inflation, including risks to the projection, will be set out in the Monetary Policy Report, to be published on 23 October 2008.

Bank of England
Bank of Japan
European Central Bank
Federal Reserve System
Swiss National Bank
Sveriges Riksbank