The Bank of Canada's warnings about coming interest rate hikes may already be reaping benefits, including changing the behaviour of consumers, governor Mark Carney says.
The central banker says in a speech about the advantages of signalling future intentions, and its limitations, that his persistent warnings about future interest rate hikes may be influencing the types of mortgages homebuyers are acquiring.
He noted that the share of fixed-rate mortgages has almost doubled to 90 per cent this year, with a corresponding decline in variable-rate mortgages.
The central bank has not deviated from the one-per-cent policy rate since September 2010, but in the past year has warned that its next move, whenever it comes, will most likely result in higher rates.
"Our guidance indicates that some policy action may be necessary, encouraging a degree of prudence in household borrowing," Carney said in the speech to Toronto financial analysts.
"The share of new fixed-rate mortgages has almost doubled to 90 per cent this year, reflecting the combination of attractively priced fixed-rate mortgages and the tightening bias of the Bank of Canada."
Carney's reasoning is that the more transparent a bank is about its future intentions, the more likely players in the economy will act according to expectations.
Read more Business News
- Boonstock beginsPenticton / S. Okanagan - 2:11 pm
- Pro-Palestinians protestWest Kelowna - 3:07 pm
- Standing up for Israel?Poll - 5:00 pm
- YLW runway clearKelowna - 1:02 pm
|QHR Technologies Inc||1.20||-0.01|
|Anavex Life Sciences||0.255||-0.007|
|Copper Mountain Mining||2.67||-0.08|
|Sunrise Resources Ltd||0.035||+0.005|
|Mission Ready Services||0.155||+0.005|
On March 6, 2010 a bridge in Turku, Finland bent 56 inches (143 centimeters) due to structural failures of both piers. No one was injured. The bridge had to be demolished 4 months later. Our infrast...
Eighty percent of our success in learning from other people is based on how well we listen. Other people’s experience can be enormously helpful. With it we can often overcome time restraints and...
Photo: Thinkstock.comWays to reduce your Debt:Make a budget and get budget counselingA basic first step for debt reduction is to prepare a budget and plan your spending. Once you have a budget, you mu...