It might have happened an ocean away, but the Brexit is having global reverberations. What does the UK’s exit from the European Union mean and how will it affect life here in Canada? What else is going on in the global financial picture and how does it tie into residential real estate here in Eastern Ontario? VERICO Economic Consultant Michael Campbell breaks it all down in the July 2016 Quarterly Highlight Report.
How Brexit Affects You
“Brexit is important but it’s part of a much bigger story,” writes Campbell. “The Brexit vote and the demise of the European union is driven by economic and financial events, not politics.” Campbell goes on to explain that the UK vote has ripple effects here in Canada. As confidence in Europe wavers, global economic growth will slow. That leads to a diminshed demand for oil, which affects our western provinces. “Translation – the recovery in Alberta will be slow, which will be a negative for employment growth and the real estate recovery in that province.”
Interest Rates Will Stay Low
Another consequence of Brexit may benefit those looking to buy a home. Though the Federal Reserve would love to raise interest rates, Brexit is forcing Feds to play the “waiting game” and “rates will stay low in Canada with no factors that merit an increase.” “In Canada there is absolutely no economic pressure to raise rates,” says Campbell. “And that’s not going to change as long as the three levels of government combine to take increasing amounts of money out of people’s wallets.”
Numbers You Should Know
Some interesting statistics to keep in mind:
- 144,000 – the number of net new jobs created in Canada last year
- $1.2 trillion – the amount of money that left China in the last year (Hello, Canada!)
- 100% of first-time buyers would like to see lower home prices
- 0% of homeowners are willing to sell their homes for less in order to increase affordability
You can read more about the Brexit vote, the interest rate waiting game, and how it affects your financial picture in the Quarterly Highlights below. If you have any questions about how to make your mortgage work for your financial plans, talk to your mortgage advisor today!