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The 'govt' will only raise rates substantially when they feel the economy requires a cooling effect (taking away the punch bowl just as the party gets started,
by tomsaffell 16y ago
The 'govt' will only raise rates substantially when they feel the economy requires a cooling effect (taking away the punch bowl just as the party gets started, and all..), by which time house prices will have gone up. The circumstance in which we could have high rates and falling property prices is the crash after the next rally (if market cools too quickly), which is a ways off.
- mrtron 16y agoI know the Bank of Canada better (econ prof from there) than the Federal Reserve. Their goal is to keep inflation at ~2%. Basically there are only a few tools they use, money supply and interest rates. It is hard to bet on when inflation will become a concern and to what level. Banks are already betting on it happening with their 5 year fixed rates increasing before the actual rate has changed. But it comes back to the point that if rates do skyrocket within 5 years at the end of your fixed term you could be stuck with a house lower in value than you purchased it and monthly rates you can't afford.