By Brian Madigan LL.B.

The interest rate environment in North America has been low. The US Federal Reserve has maintained the discount rate at 0.50% since June 2006.

Now, the rate has now increased to 0.75%. This comes in response to the improvement in financial market conditions. The new rate will take effect 19 February 2010. While only a limited number of transactions are based on the discount rate, it is still very symbolic.

The Bank of Canada has agreed to maintain its rate at 0.25% until 30 June 2010. The US interest rate was double and now it is triple the Bank of Canada rate.

Essentially, that means that there is further pressure to increase rates on the 1st of July. Other countries have already increased their interest rates.

In the short term, this should prompt consumers to lock into longer term preferred rates or purchase properties. In the longer term, this should stabilize the market and remove any “bubble effect” in the GTA real estate market.

Brian Madigan LL.B., Real Estate Broker, is an author and commentator on real estate, finances and the law related to real estate
www.OntarioRealEstateSource.com