The Bank of Canada left its overnight rate target of 1 per cent unchanged for the 16th consecutive month. Mark Carney, BoC governor, said that although interest rates remain unaltered, the Bank is aware that their decision could cause additional household debt. He believes that continued low interest rates will offset global economic uncertainty and lead to a strong housing market and increased consumer spending.
“Household expenditures are expected to remain high relative to GDP (gross domestic product) and the ratio of household debt to income is projected to rise further,” he added.
Lowest Closed Mortgage Rates In Alberta - 3rd Week of 2012
Source: Rate SuperMarket.ca and RateHub.ca
The Minister of Finance, Jim Flaherty, is also aware of the risk of increasing household debt, saying that the federal government is prepared to take action if continuing low mortgage rates drive additional home buying that leads to increasing personal debt. He claimed that the housing market has softened recently, but the government’s immediate plan is to not tighten mortgage rules.
The next BoC rate decision will be announced in March 8, 2012.