Top mortgage stories of the week:

• The Bank of Canada leaves the key interest rate unchanged
• New mortgage rules slam door on cooling housing market
• Many Canadians couldn’t cope well with higher rates
• Carney tempers expectations for economy

This Week's Quotation:

“Nearly all men can stand adversity, but if you want to test a man's character, give him power. ” - Abraham Lincoln

The Bank of Canada leaves the key interest rate unchanged

The Bank of Canada left the key interest rate unchanged for the 15th consecutive time on Tuesday. This means borrowing costs will stay flat for variable mortgage holders since the prime rate, on which variable mortgage rates are priced, follows the Bank of Canada interest rate.

At the last interest rate announcement, Bank of Canada Governor Mark Carney adjusted his interest rate outlook following worsening conditions in the European economy. Previously, he had warned a rate hike could soon be expected. This seems to no longer be in the cards in the short-term. Europe is an ongoing threat to the world economy while emerging economies are growing at a slower pace than expected.

Carney expressed his continued concern around the record level of Canadian household debt in his report following the interest rate announcement, signalling his unrelenting position to raise the interest rate if need be. However, we have yet to see the effects of the recent mortgage regulation changes. Earlier this month the federal government enacted mortgage rule changes – the most notable being a reduction in the maximum mortgage amortization from 30 years to 25 years – aimed to cool the housing market and household borrowing.

For the time being, mortgage rates will continue to hover near record lows while the new mortgage rules take effect. Read more....

New mortgage rules slam door on cooling housing market

Existing home sales dropped 1.3% in June from the month before and were down 4.4% from the year before, suggesting that Canada's housing market was already cooling before Ottawa tightened mortgage rules. The national average home price in June was $369,339, down 0.8% from the same month last year, Canadian Real Estate Association reported Monday… Read more....

Many Canadians couldn’t cope well with higher rates

When it comes to paying down mortgage and other debts, many Canadians don't have enough wiggle room to cope if interest rates increase much, a new survey shows. The findings, released Tuesday by the Canadian Institute of Chartered Accountants, indicates that almost half – 48% – of the 1,000 Canadians surveyed said a significant increase in interest rates would make it challenging to keep up on mortgage or debt payments, and 29% said they would encounter "serious problems" should interest rates climb 2% or less… Read more....

Carney tempers expectations for economy

Mark Carney's outlook has deteriorated for Canada, the United States, Europe, China, the global economy and world prices for key commodity exports like oil. But he is keeping his finger on the trigger for a possible interest-rate hike. In a quarterly forecast released Wednesday, the Bank of Canada Governor and his policy team expanded on why they have cut Canada's growth projections for 2012 and 2013, and pushed back their time line for when the economy will be back at full capacity... Read more....