The Bank of Canada announced Wednesday that they will be keeping the status quo; deciding to hold the overnight lending rate at 0.5 per cent.
Generally, the Bank of Canada will move the overnight lending rate down when it looks to inject economic stimulus into Canada and will raise rates when it wants to keep inflationary pressures at bay.
The Bank of Canada claims that economic prospects in Canada have worsened since their last Monetary Policy Report from April last year and that the overnight lending rate may not move until as late as end of year 2017. Even as oil approaches $50 a barrel and the Looney steadies itself in the mid 70’s against the US Dollar, the Bank of Canada does not display any sort of appetite to increase rates.
Although there were some factors for concern, the Bank of Canada did display optimism – “It does appear that the positive forces at work in the economy are starting to outweigh those that are negative,” the BoC said in its statement this Wednesday. “First-quarter GDP growth appears to have been unexpectedly strong.”
If you’re currently in a variable rate mortgage, you certainly have cause to celebrate. The Bank of Canada has not moved their overnight lending rate up since September 2010, and has actually cut rates twice since then. Talk about raising rates seems to be a can that just keeps getting kicked down the road; now as late as the end of 2017.
Don’t think that Banks and other mortgage lenders haven’t noticed too; five years ago you might have secured a variable rate mortgage as low as Prime – 0.90%, resulting in some MonsterMortgage.ca clients holding mortgage rates as low as 1.80% even to this day. In the market today, the variable rate products that lenders offer have tightened to approximately Prime – 0.30%. Although variable rate products are still priced lower than fixed rate mortgages, the difference or the spread between them has narrowed considerably.
The variable rate product is certainly still viable in today’s market; however, if you’re coming up for renewal, you should take the time to speak to a Mortgage Expert on what product might best suit your needs and fit into your mortgage plans.
If you want to know more about the Bank of Canada, and what the future may hold for variable rate mortgage products,fill out the form above, and speak to a MonsterMortgage.ca Mortgage Expert today!BACK TO BLOG FEED