As you know, your adjustable 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 October 21, 2015, the Bank of Canada again did what we expected them to do … they continued to maintain their overnight rate. 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 2.70%. This is fabulous news and don’t forget to make the most of your low payments while interest rates are still at historic lows. If you haven’t done so already, give me a call and we can chat about helping you get set up with a great GIC, Tax Free Savings Account, or Retirement Savings Plan as your payments continue to remain low. Maybe you are thinking of saving for a special occasion or expect a large expenditure in the near future (car, college/university, cottage or investment property purchase), and would like to chat about some budgeting and saving strategies – let me know as I would be happy to assist.
“Global economic growth has been a little weaker than expected this year, but the dynamics pointing to a pickup in 2016 and 2017 remain largely intact. Uncertainty about China’s transition to a slower growth path has contributed to further downward pressure on prices for oil and other commodities. These factors are weighing on growth in many emerging markets and some other economies. Looking ahead to 2016 and 2017, the positive effects of cheaper energy and broadly accommodative financial conditions should become increasingly evident. In the United States, the economy is expected to continue growing at a solid pace with particular strength in private domestic demand, which is important for Canadian exports.
Canada’s economy has rebounded, as projected in July. In non-resource sectors, the looked-for signs of strength are more evident, supported by the stimulative effects of previous monetary policy actions and past depreciation of the Canadian dollar. Household spending continues to underpin economic activity and is expected to grow at a moderate pace over the projection period. However, lower prices for oil and other commodities since the summer have further lowered Canada’s terms of trade and are dampening business investment and exports in the resource sector. This has led to a modest downward revision to the Bank’s growth forecast for 2016 and 2017”.
Based on this news and slower level of economic activity in Canada, the Bank does not expect to increase their rate in the foreseeable future. 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 interest rates have remained relatively unchanged since March of this year with the average 5 year fixed wholesale rate hovering at 2.69% and the 5 yr benchmark (posted) rate at 4.64%.
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 adjustable rate product. However, if having a fixed payment is important to you, call me so I can run some numbers and together we chat about the strategy and plan forward. The next announcement on any change to the prime rate is December 2nd, 2015, at which time I’ll be in touch again.
I wonder if I can ask a favour – this is a great time for home owners that have significant high interest credit card or other debt to consider their options for refinancing. If you know of someone that is looking for advice on their mortgage options and strategies on how to save unnecessary interest, would you mind passing my contact information on to them – this is very much appreciated.
