Monthly Archives: May 2016

Bank of Canada Announcement

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 form 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 25, 2016, the Bank of Canada maintained their overnight rate which in essence means no change to the interest rate of your variable rate mortgage, line of credit and/or student loans. This is still good news for the amount of interest that you will pay, but we also have to recognize that it is a reflection of the slow economy.

So summer looks like it is finallly on its way with the weather warming up; are you thinking of some renovations or sonsolidating some debts that don’t seem to be going away anytime soon! It is never yo 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.

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 global economy is evolving largely as the Bank projected. In the US, despite weakness in the first quarter, a number of indicators, including employment, point to a return to solid growth in 2016. In Canada, the economy’s structural adjustment to the oil price shock continues, but it is proving to be uneven. Growth in the first quarter of 2016 appears to be in line with the Bank’s April projection, although business investment and intentions remain disappointing. The second quarter will be much weaker than predicted because of the devastating Alberta wildfires. The Bank’s preliminary assessment is that fire-related destruction and the associated halt to oil production will cut about 1 1/4 perecentage points of real GDP growth in the second quarter. Theeconomy is expected to rebound in the third quarter, as oil production resumes and reconstruction begins. While the Canadian dollar has been fluctuating in response to shifting expectations of US monetary policy and higher oil prices, it is now close to the level assumed in April. Canada’s housing market continues yo display strong regional divergences, reinforced by the complex adjustment underway in the economy.

The Bank of Canada is still concerned with the financial vulnerabilities and regional divergences underway in Canda’s economy. It is still anticipated that rates won’t start increasing until well into 2016 even early 2017. Remember, that any increase to the prime rate since 1992 has only been 0.25% at any ONE time, so you won’t see a large significant increase all at once.

Fixed rates haven’t really changed at all since the last announcement, and are around 2.59% to 2.69% for a five year fixed term. Some lenders offering quick close specials at slightly discounted rates.

Based on this recent announcement, and the anticipation that the prime rate will remain low for a while now, unless you fell otherwise, I’d recommend that you remain with your current variable rate product as the interest is lower than a fixed rate term 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 it if is suitable for you. I’ll be in touch again for the next announcement on Jluy 13th, 2016.

I wonder if I can ask a favour, if you hear a friend or family member talk about going throu a financially tough time – maybe I can help with some budgeting, credit counselling and debt consolidation options for them. Also, do you have a friend or family member where buying their first home is on the “wish list”, would you mind passing my contact information on to them – this is very much appreciated.

Yours truly,

Eva Neufeld AMP
Verico Mortgage Tailors
(780) 244-0505