On March 1, 2017, the Bank of Canada announced its benchmark interest rate of 0.50% would remain unchanged for the foreseeable future. Bank of Canada Governor Stephen Poloz cited uncertainty in the Canadian and global economies and the need for more stimulus as key reasons for the decision. Low interest rates have been the norm in Canada for almost a decade, and have helped reduced mortgage costs for families and home buyers. Low rates are one of the key reasons for the strength of the housing market. In Tembo Financial’s opinion, low rates are here to stay, and the Bank of Canada has even casually suggested the very real possibility of negative interest rates.

While Canadians have gotten used to low interest rates and cheaper money, recent history shows that this has not always been the case. Tembo Financial has prepared this brief blog to provide an outline of the ebbs and flows of interest rates in Canada over the last few decades.

Shortly before 2008, interest rates reached a peak of just over 4%. They were then progressively lowered to a record of 0.25% by 2010 in the aftermath of the 2008 Great Recession. This was one of the reasons Canada fared better than most other countries in managing job losses and economic difficulties. From the mid 1990s to 2000, when the Canadian economy was booming, rates averaged roughly 4% and reached a peak of just under 6% by early 2001. The bursting of the dot-com bubble and 9/11 were two serious shocks to our economy, and lead to rates being lowered to 2% where they largely remained throughout 2002-2004.

Many middle aged and older Canadians will remember that interest rates reached peaks of over 8% in early 1996. These high rates took place within a deep recession, and very difficult times for job hunters and individuals engaged in real estate. For those who believe 6 and 8% rates are high, the rate in 1990 was over 14%. At that time, many politicians and business leaders were openly calling on the Bank of Canada to lower rates. Over the last 25 years rates have been steadily lowered, with 4% being the average. Those looking to buy or sell should keep in mind that the opportunities of the present real estate market have never been as strong in the past, and Tembo Financial believes that lower than average rates are here to stay.

Cheap money and sky-high prices mean that this is the best time to buy and sell real estate in over 30 years. Have you sold your home, and now can use an advance on your equity before closing day, perhaps you need money for renovations?  Tembo Financial can help!  Tembo offers this unique service to homeowners in Ontario and the GTA.  You could receive your money in as little as 48 hours with no credit check and no appraisal* for expenses that matter to you.  Don’t wait, start today!

*Subject to qualification.