As you know, your variable rate mortgage, line of credit and/or student loans are all based on the Prime Rate and here is your personal update from me on the recent Bank of Canada announcement on changes to their Overnight Rate which in most cases impacts your Prime Rate.
At 10:00 am EST, Wednesday October 22, 2014 the Bank of Canada again did what we expected them to do … they continued to maintain their overnight rate and in fact are not likely to make any change until possible 2016 now! What this means to you is that once again the prime rate on your mortgage, line of credit or student loan will not change and remains at 3.00%. This is great news, but are you still making the most of the low payments you have! If you have any high interest credit card debt that you can’t pay off in full each month, it might be a good time for us to chat about a possible debt consolidation into your mortgage to save you some unnecessary interest… get a clear financial outlook void of expensive debt and start the new year off right and debt free!
Here is an excerpt of the announcement from the Bank of Canada and what they had to say about their decision today:
“Although the outlook remains for stronger momentum in the global economy in 2015 and 2016, the profile is weaker than in July and growth prospects are diverging across regions. Persistent headwinds continue to buffet most economies and growth remains reliant on exceptional policy stimulus. Against a background of ongoing geopolitical uncertainties and lower confidence, energy prices have declined and there has been a significant correction in global financial markets, resulting in lower government bond yields. Despite weakness elsewhere, the U.S. economy is gaining traction, particularly in sectors that are beneficial to Canada’s export prospects. The U.S. dollar has strengthened against other major currencies, including the Canadian dollar.”
One more important comment from the BOC:
“the financial stability risks associated with household imbalances are edging higher”.
The Bank has now extended out when they may consider a change and increase rates to as far out as 2016! They continue to wait and see economic growth continue on a more upward direction and become more sustainable long term. Remember, that any increase to the prime rate since 1992 has only been by 0.25% at any ONE time, so you won’t see a large significant increase all at once.
Fixed rates haven’t changed much at all since the last announcement and are around 2.99% to 3.09% for a five year fixed term.
Based on this recent announcement, and the anticipation that the prime rate will still remain low for a while now, unless you feel otherwise, we’d recommend that you remain with your current adjustable rate product as the interest is lower than a fixed term rate right now. However, if having a fixed payment is important to you, call us so we can calculate your new payment and formulate a strategy and plan that is right for you. The next announcement on any change to the prime rate is December 3rd, 2014 at which time we’ll be in touch again.
As always, give us a shout (403.250.2100) to discuss various money saving strategies. And if you’re looking to invest in real estate, now might be the time as prices have pulled back slightly.
Your Mortgage Planners,
Canada Mortgage Direct