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Does Interest Rate Will Continue to Rise?

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When it comes on talking residential mortgage, there are only two types of interest rates. These two types of interest rates are fixed interest rate and variable interest rate. Fixed rates may vary in accordance to yields of the bond. It is a type of rate which is stable. It suits to people who are not fond of taking risks. It is a type of interest rate which is known for its stable and same amount of monthly bill for a certain long period of time. The bond yields are not changing because it is a stable interest rate. It suits to people who seek for stable debt ratio.


There are several factors that can change or influence movements of yields such as Government debt issues, business borrowing, inflation and financial market condition. These factors can relatively cause several interest rate movements.


Another type of interest rate is Variable rate. The movement of this interest rate may vary in accordance to the bank prime rate which is anchored and regulated by Bank of Canada through its overnight lending rate. Naturally, the target rate of Central bank is unstable. Interest rate may vary between the ranges of 0.75% up to 1.25%. It usually stays at 1% target rate for a long period of time. In the last quarter of year 2010, the interest rate became dull at 1%.  The bank did not see any valid reasons to raise the prime rate. There is no any indication that prime rate will rise as long that there is no underlying situation that might happen.


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