Home > Interest Rates, Mortgages > IS THERE A CORROLATION BETWEEN OIL AND INTEREST RATES!!!

IS THERE A CORROLATION BETWEEN OIL AND INTEREST RATES!!!

January 14th, 2015

Oil price vs interest rateShort answer is Yes. Since oil is a major part of the Canadian economy, lower oil prices means less royalty money for the government.   Due to the lower oil price, the Alberta oil patch is likely to cut production which would mean job losses. When determining interest rates, unemployment is one of the key indicators the government watches.   Bad news in the economy tends to mean good news for interest rates, meaning it exerts pressure on the Bank of Canada to reduce the prime lending rate (which affects the variable rate) additionally. The impact on the GDP will hold down the government bond yields which affects the fixed mortgage costs.

For now it does not look like we will be facing rate increases for variable or fixed rate mortgages!

January 8th, 2015 – Designer Mortgages Inc. copyright.

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