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 July 16th, 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 possible 2016 now! 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 3.00%. This is fabulous news but are you still making the most of the low payments you have! If you have any high interest credit card debt that you can’t pay off in full each month, it might be a good time for us to chat about a possible debt consolidation into your mortgage to save you some unnecessary interest… get a clear financial outlook void of expensive debt and start your summer off right and debt free!
Here is an excerpt of the announcement from the Bank of Canada and what they had to say about their decision today:
“the global economy is on a lower growth track than was foreseen… Serial disappointment with economic performance during the past several years has mainly reflected the impact of private-sector deleveraging, fiscal consolidation and, especially, the lingering effect of uncertainty on business investment and trade. Nevertheless, the Bank continues to project that global growth will gather momentum as these headwinds abate. Given the downgrade to the global outlook, economic activity in Canada is now projected to be a little weaker than previously forecast. However, the Bank still expects that the lower Canadian dollar and a projected strengthening in global demand will lead to a pickup in Canadian exports and business investment and, eventually, a more sustainable growth track”
The Bank has now extended out when they may consider a change and increase rates to as far out as 2016! They continue to wait and see economic growth continue on a more upward direction and become more 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 September 3rd, 2014 at which time I’ll be in touch again.
I wonder if I can ask a favour – this is a great time for first time home buyers who are thinking of purchasing to start with a pre-approval plan now to get them on track and save unnecessary interest. It is advisable to start planning ahead and would be happy to provide an idea of closing costs and monthly budget payments to start those that you know on the path to home ownership. Also, 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 consolidationoptions for them. In either of these cases, would you mind passing my contact information on to them – this is very much appreciated