The Royal Bank of Canada (RBC) expects that Canadians being hit by higher interest rates in the second half of 2010 and in 2011.
RBC economists note that the Bank of Canada will be among the group of central banks to more off floor low rate with the Canadian bank’s overnight rate finishing 2010 at 1.25%.
RBC economists believe that the trend setting rate could rise to as much 3.5% in 2011.
With the bank rate being at 0.25% for most of 2009, it has encourage borrowing, however it has also been raising concerns that Canadians are overextending themselves.
This can be quite true if you look at the fact that people have been purchasing homes partially based on the fact that there are extremely low mortgage rates available.
On the other hand, people have to know where they stand financially, and it is only right to think that they are spending the necessary amount they can afford without stretching themselves too thin.
Just be prepared for when lending costs go up. This means that for buyers on the market right now, do what you can to find the house for you, that way you can lock in a low rate.
Jeff Markewich
Broker of Record with InfoMarket Group GMAC Real Estate
www.imgrealestate.ca
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