On the international front, Korea and Australia cut interest rates this week to provide stimulus to their economies. These countries are both mainly exporters and lower interest rates will help stimulate their domestic consumption as well as reduce the strength of their currencies to make their products cheaper on the global marketplace. Some analysts view Korea’s move as specifically targeted to combat Japan’s weakening currency since Japanese companies compete directly with many of Korea’s major manufacturers.
The Bank of England left rates unchanged this week as it waits to see how effective previous stimulus measures will become. The Bank of England may also want to wait for the new Governor, Mark Carney, to start his new job in June after many successful years as the Governor of the Bank of Canada.
The US economy continues to produce improving job numbers despite government spending cuts as jobless claims fell to a five year low. This shows that the US economy may not be as fragile as some has predicted. Improving job prospects will increase consumer confidence, which is a huge factor in the sustainability of any economic recovery.
Stephen Poloz was named the new governor of the Bank of Canada and although his appointment surprised some analysts, it is expected that he will continue to focus on inflation concerns as his predecessor did. However, there are some pundits that predict that Poloz may turn his attention to the strength of the Canadian dollar. The strength of the currency has slowed growth in Canada, particularly in the resource, tourism and manufacturing sectors. Over the past week the dollar has remained very close to par and despite many international investors betting against it, the dollar has remained resilient.
Bond yields increased around 0.10% this week but this should not be enough to cause any lenders to increase mortgage rates. Fixed term mortgage rates remain near historical lows and should remain there for the short to medium term.
Please remember that 80% financing is available for qualified US residents at great rates!
Jason McLean BSc, AMP
The Mortgage Centre: Garibaldi Mortgage