US Economic Growth (Q2'2015) July 30, 2015
US real GDP grew at a modest 2.3 per cent annual rate in the second quarter, led by positive contributions from personal consumption, exports, and government expenditures. Most importantly, the contraction in GDP initially reported for the first quarter was revised away, with GDP now estimated to have grown 0.6 per cent.
Improved US economic growth will help the Canadian economy regain its footing in the second half of the year, but may also prompt the US Federal Reserve to begin tightening monetary policy as early as September. If so, we could see Canadian long-term interest rates, and therefore longer-term mortgage rates, dragged higher in spite of recent action by the Bank of Canada.
It may be a good time to get off the fence and lock in that purchase that you have been looking for whether you are moving up, down or buying some recreational property for the family as a long term investment.
BCREA ECONOMICS NOW
- July 15, 2015
The Bank of Canada announced this morning that it is lowering its target for the overnight rate by 0.25 percentage points to 0.5 per cent. In the press release accompanying the decision, the Bank emphasized that while this additional stimulus is required to help return the economy to full capacity given a contraction of GDP over the first half of the year, vulnerabilities associated with household imbalances could edge higher.
Although core inflation remains close to the Bank's 2 per cent target, growth in the Canadian economy has stagnated. Today's rate cut should help to partially offset the negative impacts of low energy prices in the parts of Canada hardest hit by the dramatic decline in oil prices and oil and gas activity while providing further stimulus to regions like British Columbia that are enjoying more robust growth.
For housing, the impact in markets like Vancouver or the Fraser Valley that are already experiencing very strong demand may be relatively muted. For other markets that been more negatively affected by low energy prices, including some areas of Northern BC, this may help spur housing demand.
So if you have been sitting on the fence this may be the time to step off and get into the market.