The Bank of Canada has Maintained the Rate!
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 9th, 2016, the Bank of Canada maintained their overnight rate which in essence means no change to the interest rate on your variable rate mortgage, line of credit and/or student loans. This was despite the on-going pressure to consider dropping their rate in order to relieve the publics concerns with the current economic conditions. This is still good news for the amount of interest that you will pay, but we also have to recognize that it is a reflection of the ailing economy.
So let’s not forget that this is a great time to take advantage of such historical low rates and chat to a financial advisor about a Tax Free Savings Account or some RRSP contributions to trigger a potential income tax refund; you might have missed the RSP deadline for this year but it is never too late to start saving and planning for the future. If you don’t have a financial advisor, let me know and I’d be happy to recommend one to you.
On another note, are you carrying a balance on any lines of credit or credit cards right now where the interest rate is over 3%? If so, this is the perfect time to chat about a potential debt consolidation or refinance especially – let’s start saving you some unnecessary interest and getting to your mortgage burning party sooner! Maybe you are planning a renovation project soon or purchasing a second home or rental property – chat to me about your options … I’d be happy to make those plans into realty.
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:
“Financial market volatility, reflecting heightened concerns about economic momentum, appears to be abating. Although downside risks remain, the Bank still expects global growth to strengthen this year and next. Recent data indicate that the U.S. expansion remains broadly on track. At the same time, the low level of oil prices will continue to dampen growth in Canada and other energy-producing countries. Prices of oil and other commodities have rebounded in recent weeks. In this context, and in light of shifting expectations, the Canadian dollar has appreciated from its recent lows. Canada’s GDP growth in the fourth quarter was not as weak as expected, but the near-term outlook for the economy remains broadly the same as in January. National employment has held up despite job losses in resource-intensive regions, and household spending continues to underpin domestic demand. Non-energy exports are gathering momentum, particularly in sectors that are sensitive to exchange rate movements. However, overall business investment remains very weak due to retrenchment in the resource sector. ”
The Bank of Canada indicates that inflation in Canada is evolving broadly as anticipated but an assessment of the impact of the upcoming federal budget’s fiscal measures will be incorporated into next month’s projection. It is still anticipated that rates won’t start increasing until well into 2016. 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 have only fluctuated a little since the last announcement, and are around 2.69% to 2.89% 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. I’ll be in touch again for the next announcement on April 13th, 2016.
I wonder if I can ask a favour, if you hear a friend or family member talk about going thru a financially tough time – maybe I can help with some budgeting, credit counselling and debt consolidation options for them. It is also that time of year that many think about what they want to accomplish this year – if buying their first home is on the “wish list”, would you mind passing my contact information on to them – this is very much appreciated.
Yours truly,
Mark Kupina – MortgageTeam 905.730.4782 – mark@kmortgage.ca
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