Bank of Canada

Good morning,

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 March 4th, 2015 the Bank of Canada again did what we expected them to do … stay the course.   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 2.85%.  This is fabulous news but are you still making the most of the low payments you still have, as the rate will increase in the future.   No doubt you are getting ready to file in 2014 Income Tax Return – are you getting a refund?   Give me a call and we can chat about helping you make the most of that refund and the savings you continue to make on your mortgage – I have some great budgeting and savings strategies for you – let me know as I would be happy to assist.

Here is an excerpt of the announcement from the Bank of Canada and what they had to say about their decision today:

“The global economy is evolving broadly in line with projections in the Bank’s January Monetary Policy Report (MPR). The United States remains the main source of momentum in the global economy, while headwinds to growth linger in many regions. In this context, a growing number of central banks have taken actions to ease monetary conditions. Crude oil prices are close to the Bank’s MPR assumptions.
Canadian economic growth in the fourth quarter of 2014 was consistent with the Bank’s expectations. The oil price shock had a modest early impact on aggregate demand, and a larger effect on income. The Bank continues to expect that most of the negative impact from lower oil prices will appear in the first half of 2015, although it may be even more front-loaded than projected in January. Nevertheless, data for 2014 as a whole suggest the anticipated rotation into stronger growth in non-energy exports and investment is well underway.”

It’s important to note that we are in uncharted waters and it’s really anyone’s guess as to the BOC’s next move. They need to wait to 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.

As for fixed rates, we have seen a slight decline as investor seek shelter in the bond market. The current 5 yr fixed rate remains at 2.79% – 2.89%. That said, the 10 yr fixed rate has once again fallen below 4%. Click here to see today’s great rates.

Based on this recent announcement, and the anticipation that the prime rate will remain low for a while now, unless you feel otherwise, I’d recommend that you remain with your current variable 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 me so I can calculate what your new payment would look like and also if it is suitable for you. The next announcement on any change to the prime rate is April 15th, 2015 at which time I’ll be in touch again.

If you are thinking of listing your home for sale and/or buying a new home, renovating, debt consolidation to free up cash flow, give us a call…we’d be happy to discuss the various options.

We hope you appreciate our commentary and if know others who could benefit, please don’t hesitate to pass this information along. If you’re interest in talking strategy (variable vs. fixed, 2 yr vs. 5 yr, etc…), give us a call. To better understand how this may impact you or how can you take advantage of the BOC announcement, give us a shout at 403.250.2100.

Your Mortgage Partners,
Canada Mortgage Direct