The latest interest rate announcement and policy statement from the Bank of Canada make it pretty clear there’s unlikely to be any increase this year (great news for you variable rate mortgages). While the economy appeared to be making all the right moves early in the first quarter, in the end, the results didn’t meet expectations. The resurgence of the Greek problem, the growing troubles in Spain (euro zone finance ministers agreed to lend Spain up to $125-billion (U.S.) to shore up its struggling banks), slowing in the rest of Europe, China and the U.S., and weaker than expected growth at home have the central bank backing away from hints about a hike. Nonetheless the Bank remains concerned about the risk of a housing bubble and a high level of household debt.

Canada’s banking regulator has stepped in with changes that may take some of the edge off the central bank’s worries about household debt. The Office of the Superintendent of Financial Institutions (OSFI) plans to cut the amount of debt available through home equity lines of credit (HELCOs). The current limit of 80% of value will be chopped to 65%, but it seems like the idea of requiring balances to amortize is off the table,  Which is some good news in a bad news situation.

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Lee Welbanks is a Mortgage Broker with Welbanks Financial Group, Lee will be posting these informative “Market Minutes” each week for you to enjoy. Please remember to the Spring Realty Insider Club list to receive new blog post notifications, featured properties and insider access to Toronto’s hottest new developments right to your inbox. Find us on Facebook and Twitter too!

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