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Bank of Canada will likely hold interest rates another year..

Posted on Jul 19, 2012 in Mortgage Market Updates and News

Bank of Montreal is now predicting the Bank of Canada will hold key interest rates low until July of 2013. This prediction is six months longer than BMO’s recent projection of January 2013.

Bank of Canada’s prime rate, which effects the bank’s prime lending rates, has been held at 1%, which is a prime lending rate of 3%, since September of 2010. Experts keep bumping their projections of when prime rate will increase further and further away, now July 2013.

With the recent changes to mortgage qualification rules, some of heat should be taken off of the household debt level concern, that experts say could encourage the Bank of Canada to increase interest rates.

“The tightening of the government’s mortgage insurance rules does serve to act like higher interest rates specifically for that sector,” Gregory said. “So that takes some of the urgency away from the Bank of Canada to adjust rates any time soon.”

Gregory went on to say he suspects July of 2013 because the Bank of Canada will release its monetary policy report on July 18, 2013.