22 October 2010

Tal also added:
•    The Bank of Canada thinks the economy won’t reach the necessary potential until the year-end 2012. It’s one year later than it was previously expected.
•    There’s no need for BoC to raise rates in order to slow the consumer credit – the deal is that “it’s already happening.”
•    Today the consumers’ spending capability is at a “30-year low.” It means it won’t take many rate hikes to slow the economy.
In addition to it, Tal said he doesn’t expect mortgage rates to rise greatly in the next 12 months.
Speaking about the choice of mortgage rates, Benjamin Tal added: “I’m almost sure that during the next 2-3 years variable rates will be better. Then, in the last two years fixed will be better. But the difference between fixed and variable will not be very significant over five years”.
In other words, he believes that “mathematically speaking,” variable-rate mortgages will “probably” be more profitable for borrowers.

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