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:
“The global economy is expected to regain momentum in the second half of this year and through 2017 and 2018. After a weak first half, the US economy, in particular, is strengthening: solid consumption is being underpinned by strong employment growth and robust consumer confidence. However, because of elevated uncertainty, US business investment is on a lower track than expected.
Looking through the choppiness of recent data, the profile for growth in Canada is now lower than projected in July’sMonetary Policy Report (MPR). This is due in large part to slower near-term housing resale activity and a lower trajectory for exports. The federal government’s new measures to promote stability in Canada’s housing market are likely to restrain residential investment while dampening household vulnerabilities. Recent export data are improving but are not strong enough to make up for ground lost during the first half of 2016, despite the effects of the Canadian dollar’s past depreciation. Growth in exports over 2017 and 2018 are projected to be slower than previously forecast, due to lower estimates of global demand, a composition of US growth that appears less favourable to Canadian exports, and ongoing competitiveness challenges for Canadian firms”.
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 0.30 to 0.50% 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 December 7, 2016.
