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 May 27th, 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 summer looks like it is finally on its way with the weather warming up; are you thinking of some renovations or consolidating some debts that don’t seem to be going away anytime soon! It is never too late, or early, to start planning for the future especially as rates are still at historical lows! Chat to me about your options … I’d be happy to make those plans into reality and save unnecessary interest along the way.
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 outlook for the Canadian also remains largely in line with the April Announcement. While a weak first quarter in the US has raised questions about that economy’s underlying strength, the Bank expects a return to solid growth in the second quarter. This will help advance the rotation of demand in Canada toward more exports and business investment. Recent indicators suggest consumption in Canada is holding up relatively well, given the impact of lower oil prices on gross domestic income. Despite the recent back-up in global bond yields, financial conditions for Canadian households and firms remain highly stimulative. The Canadian dollar has strengthened in recent weeks in the context of higher oil prices and a softer U.S. dollar”
Even though there is still some uncertainty of the economic outlook, the bank did remind us that they will assess the net effect of these recent positive developments to determine when rates will rise. Even with this information, 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 the same since the last announcement, 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 July 15, 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 keeping 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.