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Bank of Canada Annoucnement

09 Mar

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 January 20, 2016, 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. This was despite the pressure to consider dropping their rate in order to relieve the publics concerns with the current economic conditions.

For those that qualify and it makes good financial sense, now is the right time to borrow money – maybe for some renovations that would increase the value of your home or consolidating some debts that don’t seem to be going away anytime soon! So what about those that don’t qualify because of course we all know that banks give you money when you don’t need it! Read down below for some more information on how I can help. If you would like a pro bono financial check-up and consultation I’d be happy to help and continue to save you unnecessary interest along the way.

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:

“Inflation in Canada is evolving broadly as expected. Total CPI inflation remains near the bottom of the Bank’s target range as the disinflationary effects of economic slack and low consumer energy prices are only partially offset by the inflationary impact of the lower Canadian dollar on the prices of imported goods. The dynamics of the global economy are broadly as anticipated … with diverging economic prospects and shifting terms of trade. Prices for oil and other commodities have declined further and this represents a setback for the Canadian economy. GDP growth likely stalled in the fourth quarter of 2015, pulled down by temporary softness in the U.S. economy, weaker business investment and several other temporary factors. The protracted process of reorientation towards non-resource activity is underway, helped by stronger U.S. demand, the lower Canadian dollar, and accommodative monetary and financial conditions. National employment remains resilient despite job losses in the resource sector and household spending continues to expand.”

The Bank of Canada now expects the economy’s return to above-potential growth to be delayed until the second quarter of 2016 – therefore indicating rates won’t start increasing 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 2.69% to 2.99% 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. I’ll be in touch again for the next announcement on March 9, 2016.

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 with lenders that have very flexible qualifying guidelines, has been able to help many who are in transition and/or just need enough money to get them thru a tough time like finding a new job, keeping above water and feeding their family 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.

Yours truly,

Eva Neufeld

 

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