Extended low rates to benefit only some investors

They now believe the central bank will hold that key interest rate at 1 per cent until July 2013, a full six months longer than earlier estimates.

The new assessment takes into consideration the state of the Canadian economy, an uncertain global outlook and newly-minted mortgage rules here at home. They allow the BoC to keep the monetary stimulation of low rates in place, at the same time taking it out of the hands of many “vulnerable homebuyers.”

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

An extended rate hold should accrue to the benefit of investors still fitting into the increasingly narrow underwriting guidelines of most lenders.

They’ll be able to capitalize on those rock-bottom rates even as a growing number of homeowners and other investors find themselves shut out of the financing market.

The result should be less competition for properties likely to see their values decline, if only marginally.

That’s good news for investors in Vancouver and the GTA as the number of bidding wars subsides and sellers trim their selling price expectations.

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