At 10:00 am EST, today, the Bank of Canada (BoC) announced that it is maintaining its target for the overnight rate at 0.5% once again was very much as expected, which in essence means no change to the interest rate on your Variable Rate Mortgages, Line of Credit, and/or Student Loans.

Here is an excerpt of the announcement and what they had to say about today’s decision:

“Global growth in the first half of 2016 was slower than the Bank had projected in its July Monetary Policy Report (MPR), although the Bank continues to expect it to strengthen gradually in the second half of this year. The US economy was weaker than expected in the second quarter, notably reflecting a contraction in business and residential investment. While a healthy labour market and solid consumption should remain supportive of growth in the rest of the year, the outlook for business investment has become less certain. Meanwhile, global financial conditions have become even more accommodative since July. 

While Canada’s economy shrank in the second quarter, the Bank still projects a substantial rebound in the second half of this year. Second-quarter GDP was pulled down by the Alberta wildfires in May and by a drop in exports that was larger and more broad-based than expected. Exports disappointed even after accounting for weaker business and residential investment in the United States, adjustments in the resource sector, and cutbacks in auto production. The economy is expected to rebound in the third quarter as oil production recovers, rebuilding commences in Alberta, and consumer spending gets an additional lift from Canada Child Benefit payments. As federal infrastructure spending starts to have more impact, growth in the fourth quarter is projected to remain above potential. While the strength in exports during July was encouraging, the ground lost over previous months raises the possibility that the profile for economic activity will be somewhat lower than anticipated in July”.

For the full rate announcement, please click here.

Based on this recent announcement, and the anticipation that the prime rate will still remain low for at least until the end of 2016 unless you feel otherwise, I’d recommend that you remain with your current variable rate product as the interest is lower than most fixed term rates at this time.

Most lenders have also reduced the discounts on Variable Rate Mortgages which at one time was available as low as Prime minus 1%, most Variable Rate Mortgages today are priced around Prime minus 0.20 to 0.30% today. If having a fixed rate 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 scheduled date for announcing the overnight rate target is October 19, 2016.