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McLean's musing for Sept 6

Blog by Nick Swinburne | September 6th, 2013

European Central Bank left its key interest rate unchanged and indicated that rates would not be going up for quite a while.  Although there is not a lot of room for this rate to decrease, the ECB is prepared to do so if the European economy requires it.   The overall outlook for Europe is gradually improving and current estimates expect economic growth of 1% for the region in 2014.  Although this is still a very low level of growth, it should be the first year of overall positive growth in quite a while.

The global recovery continues to soldier on, with positive manufacturing numbers coming from Europe and the US.  China also reported improving factory numbers but the reliability of this report has been challenged by a few private analysts.  These gains in the largest economies are being somewhat offset by falling output in India, South Korea and Taiwan but these countries should turnaround once the larger consumer economies of Europe, US, and China gain traction.

The US also saw continued positive job numbers but the markets are focused on potential US intervention in Syria.  Any additional action in the Middle East will cause uncertainty for markets and likely cause oil prices to spike.  Dramatically higher oil  prices would threaten the current pace of economic recovery in the US, as well as most industrialized countries.

The US Federal  Reserve is still on track to begin the reduction of bond-buying stimulus measures this fall.   The expectation of this move is causing the US dollar to strengthen compared to many other currencies.

In Canada, the Bank of Canada left the overnight lending rate unchanged.  This rate has not changed in 3 years it is unlikely to change until the middle of 2014.

Bond yields continue to creep upwards which should lead to even higher fixed rates for two through ten year terms.  

It is reasonable to see interest rates return to higher levels over the next two years so this is a good time to lock in rates for future savings.

Please remember that 80% financing is available for qualified US residents at great rates!

I am always available to assist you and your clients.


Jason McLean   BSc, AMP
The Mortgage Centre: Garibaldi Mortgage
fax: 604-905-3801
cell:  604-935-9190