Bank of Canada Announcement – Dec 3rd

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 December 3rd, 2014 the Bank of Canada again did what we expected them to do … they continue to maintain their overnight rate and in fact are not likely to make any change until possibly 2016 now!   So the holiday season is upon us,  which typically results in some splurging on family, friends and yourself of course – we are often tempted to get carried away and then “worry about the extra debt later”.  I still want to make sure you stay on track to not only reach that Mortgage Burning Party date but also save as much unnecessary interest as possible.  So if you or anyone you know just got a little carried away and have some high interest credit card debt that you can’t seem to pay off in full each month, now is a great time to chat about options with rates so low.   Let’s budget and plan together – maybe you are planning a renovation project soon or purchasing a second home or rental property – chat to me about your options ….it’s never too late to start planning.

So to continue with the Bank of Canada news, here is an excerpt of the announcement and what they had to say about their decision today:

“Inflation has risen by more than expected… largely due to the temporary effects of a lower Canadian dollar and some sector-specific factors, notably telecommunications and meat prices. The U.S. economy has clearly strengthened, particularly business investment, which has benefitted Canada’s exports.  Growth in the rest of the world, in contrast, continues to disappoint…. oil prices have continued to fall, due to both supply and demand developments.  Canada’s economy is showing signs of a broadening recovery with the stronger exports beginning to be reflected in increased business investment and employment, however, the lower profile for oil and certain other commodity prices will weigh on the Canadian economy.    The labour market continues to indicate significant slack in the economy”

The Bank still feels that they won’t consider increasing rates to as far out as 2016!  They continue to wait and see economic growth continue on a more upward direction and 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, 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 January 21, 2015 at which time I’ll be in touch again.

I wonder if I can ask a favour, if you hear a friend or family member talk about going thru a financially tough time and that this holiday season might not be as joyous and they or you want it to be  – maybe I can help with some budgeting, credit counselling and debt consolidation options for them.  In either of these cases, would you mind passing my contact information on to them – this is very much appreciated.

Yours truly,

Mark Kupina

Mortgage Broker, AMP  | #M11001703
Mortgage Alliance | #10530
Cell: 905.730.4782

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