RSS

Monthly Archives: October 2015

Bank of Canada Update

Good morning

 

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 October 21st, 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 if you or anyone you know just got a little carried away and have some high interest credit card debt that you can’t seem to pay off in full each month, now is a great time to chat about options with rates so low. Maybe you are planning a renovation project soon or purchasing a second home or rental property – chat to me about your options so we can work on how much unnecessary interest we can save you but also get you closer to that Mortgage Burning Party!   It’s never too late to start planning.

 

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:

 

“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. Looking ahead to 2016 and 2017, the positive effects of cheaper energy and broadly accommodative financial conditions should become increasingly evident. In the US, 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.  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.

 

The complex economic adjustments to the decline in Canada’s terms of trade will continue to play out over the projection horizon. The weaker profile for business investment suggests that, in the near term, growth in potential output is more likely to be in the lower part of the Bank’s range of estimates”

The Bank of Canada has also indicated that as the inflation profile is roughly balanced, the Canadian economy is expected to return to full capacity at around mid-2017.   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 increased just a little since the last announcement, and are around 2.64% 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 last announcement for 2015 on any change to the prime rate is December 2, 2015 at which time I’ll be in touch again.

 

I wonder if I can ask a favour, going with my theme of “Let the sun set and the leaves fall along with Canadian consumer debt with our help” 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 consolidation options for them.  In either of these cases, would you mind passing my contact information on to them – this is very much appreciated.

 

 

Yours truly,

Eva Neufeld

 

6 ways to improve your Credit Score

 

Your credit score is a three-digit number that lenders use to predict your creditworthiness. Credit reporting companies calculate your score based on your payment history, how much you owe, how long you’ve had credit and how often you apply for new credit. If your score is lower than you’d like, here’s how to raise it:

  1. Check your credit report regularly. Request a copy of your report at least once a year from Equifax and/or Trans Union. Make sure your report agrees with your records. Correct any errors as soon as possible and watch for signs of identity theft.
  2. Make sure your credit limits appear. If your credit card limits aren’t listed, your cards are assumed to be maxed out, which damages your credit score. Ensure your limits are indicated, and stay well below them to maintain a higher score. Staying below 50% of your limit is best.
  3. Pay past due accounts. Delinquent accounts reduce your score more than anything else. Pay these accounts first.
  4. Pay new liens or charge-offs. These are your next priority. But once they’re older than 24 months, they’ve done all the damage they can do. In that case, move them to the bottom of your payment priority pile.
  5. Don’t close credit cards. Credit score software totals your available credit limits across all your cards. If you close an old card, suddenly you have a lower total limit which means your credit-to-debt ratio is higher. This drives down your score. Only close old cards if you have no self-control.
  6. Keep old credit cards active. The longer you’ve had an account open, the less likely you are to default on it, and the higher your credit score. But it’s not enough to simply keep old accounts open, you have to use the card, even if it’s only once every six months.

If you’d like to learn other proven ways to improve your credit score, talk to me today!

Eva Neufeld

(780) 244-0505