Mr. Carney emphasized that his commitment to keep the benchmark rate at 0.25 per cent is “expressly” conditional on the outlook for inflation, a new phrase that will give pause to the many economists and investors that have based strategies and forecasts on the assumption that the Bank of Canada always intended on leaving borrowing costs unchanged until at least the end of the second quarter, if not longer. The Globe and Mail
Higher inflation possibly means higher mortgage rates
March 24, 2010
Mark Carney, Governor of the Bank of Canada, said in a statement on Wednesday that inflation is higher than projected and he emphasized his unyielding commitment to price stability.
What does that mean in short?
Carney stated initially that interest rates would not increase at least until June 2010, but interest rates could go up sooner than expected…let the backpedaling begin!
This means that your bank will likely increase its prime rate as well. Although when rates were being slashed by the central banks, commercial banks did not cut their rates completely in tandem (surprise, surprise!).
So if you have a variable mortgage rate, then your rate could go up sooner than expected. Also, if you’re thinking about getting a fixed mortgage, you might want to lock in before the impending rate increases.