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 April 15th, 2015 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. So let’s not forget that this is a great time to take advantage of such historical low rates. As the weather warms up you might be thinking of some renovations, moving homeor taking advantage of the low interest rates and purchasing a cottage, rental property or somewhere for a family member to live in (for University, College or keeping aging family closer to you). Let’s chat about your options – it is never too late, or early, to start planning especially as it has been proven that real estate is an amazing long term investment! Chat to me about your options … I’d be happy to make those plans into realty.
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:
“The Canadian economy is estimated to have stalled in the first quarter of 2015. The Bank’s assessment is that the impact of the oil price shock on growth will be more front-loaded than predicted in January, but not larger. The ultimate size of this impact will need to be monitored closely. Underneath the effects of the oil price shock, the natural sequence of stronger non-energy exports, increasing investment, and improving labour markets is progressing. This sequence will be bolstered by the considerable easing in financial conditions that has occurred and by improving U.S. demand.”
Even though there is uncertainty of the economic outlook at this time, the bank did remind us that when the economy continues on a more upward direction and sustainable long term, rates will rise but in the meantime, interest rates will likely not start to increase 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 maintained with some minor fluctuations and are around 2.74% 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. The next announcement on any change to the prime rate is May 27, 2015 at which time I’ll be in touch again.
I wonder if I can ask a favour, you might know someone who is unfortunately having a tough time right now with maybe too much debt or recent loss of income. There are many options to help using debt consolidation or access to some funds to get thru the tough times using the equity in their home. I have found recently that my access to alternative funds has been able to help many who are in transition and just need enough money to get them thru a tough time like finding a new job and keep above water in the meantime. Don’t hesitate to ask them to reach out to me – I can provide a pro bono consultation to get them thru this.
Eva Neufeld AMP