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 March 7, 2018, the Bank of Canada maintained their overnight rate which means no change to your interest rate. This is great news for you to go into the spring with confidence that you continue to save unnecessary interest.
Spring is in the air and you might be thinking about some changes you want to make to your living situation. This might be Buying or Moving Up or Down or deciding to Renovate.
If this spring is the time that you really want to focus on Buying – even getting on to the property ladder for the first time – let’s start planning now. We can get you Pre-Approved ensuring that you benefit from both low interest rates and affordable payments as well as also putting yourself in a stronger negotiating position with a potentially hot market.
If you are thinking of selling, either Moving Up or Down, great planning is key. Questions you might be asking yourself are:
- Buy then sell?
- Sell then buy?
- Should you take your existing mortgage with you?
- Are there better options available?
Let’s talk – a pro bono assessment can easily answer all of these questions and more!
Maybe you are thinking of staying put but have some Renovation plans. Renovations are a great option for adding value and updating your current home. These renovations might include:
- Finishing a basement
- Renovating your kitchen
- Putting on an addition
- … and more
I can provide you financing options to help you convert your current space into a dream home. These financing solutions can make these renovations happen with ease.
In Canada, the economy grew by 3% in 2017, bringing the level of real GDP in line with the projection in the Bank’s Report. In Q4, GDP growth was slower than expected, largely due to higher imports, while exports made only a partial recovery from their Q3 decline. The gain in imports mainly reflected stronger business investment, which adds to the economy’s capacity.
Strong housing data in late 2017, and softer data at the beginning of this year, indicate some pulling forward of demand ahead of new mortgage guidelines and other policy measures. It will take some time to fully assess the impact of these, as well as recently announced provincial measures, on housing demand and prices.
Inflation is running close to the 2% target and the Bank’s core measures of inflation have edged up, consistent with an economy operating near capacity. Wage growth has firmed but remains lower than would be typical in an economy with no labour market slack. Inflation is fluctuating because of temporary factors related to gasoline, electricity, and minimum wages.
While the economic outlook is expected to warrant higher interest rates over time, the bank is remaining cautious in considering future increases for now. They are still monitoring the economy’s sensitivity to past interest rate increases, economic capacity, and the dynamics of government policy in both wage growth, inflation and the housing market. Basically, it is too early to tell when the next increase will be but likely later in the year. 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 gone up since the last announcement, but some volatility in the bond market in the last 10 days indicates they may actually drop in the next few days. For now, they are around 3.19% to 3.49% for a five-year fixed term. Also, remember that the prime rates and fixed term rates are impacted by two different sets of economic drivers and so increases in fixed rates doesn’t always mean the same increase in prime rates and vice versa.
Based on this recent announcement, I would still advise remaining in your variable rate mortgage product, however as interest rates have been increasing for the last few announcements, I would keep up with your increased monthly payments. 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 April 18, 2018.
I wonder if I can ask a favour, if you hear a friend or family member talk about going through a financially tough time, maybe I can help with some budgeting, credit counselling and debt consolidation options for them. If buying their first home is on the “wish list”, would you mind passing my contact information on to them – this is very much appreciated.