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 September 9th, 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 the long summer days are slowing winding down and we get back to a bit more of a regular routine – maybe you are quietly celebrating because the kids are back to school!! Let’s focus on how much unnecessary interest you can save with interest rates being so incredible low! I can’t remember the last time I saw interest rates under 2.5% – this is almost free money! So your mortgage rate is extremely low but do you carry any credit card, car loan, personal loan or other debt that is higher than 2.5%? Why don’t we see if we can consolidate and save you thousands in unnecessary interest – let me calculate for you how much I can save you so you can start saving for something special like a holiday, gifts during the holiday season or retirement!
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:
“Canada’s resource sector continues to adjust to lower prices for oil and other commodities, with some spillover to the rest of the economy. These adjustments are complex and are expected to take considerable time. Economic activity continues to be underpinned by solid household spending and a firm recovery in the US, with particular strength in the sectors of the U.S. economy that are important for Canadian exports.
Increasing uncertainty about growth prospects for China and other emerging-market economies, in contrast, is raising questions about the pace of the global recovery. This has contributed to heightened financial market volatility and lower commodity prices. Movements in the Canadian dollar are helping to absorb some of the impact of lower commodity prices and are facilitating the adjustments taking place in Canada’s economy. While the overall export picture is still uncertain, the latest data confirm that exchange rate-sensitive exports are regaining momentum.”
Even though there is uncertainty in the current and future economic outlook, the bank did remind us that their earlier rate drops, are working their way through the Canadian economy. Remember that they will start increasing rates when they feel it necessary – so don’t become complacent or increase your personal spending unnecessarily unless you know you can afford it. 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 2.59% to 2.84% 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 October 21, 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.