Posted by: MonsterMortgage.ca
On Wednesday, March 1st, the Bank of Canada (BoC) announced that they would not be changing the overnight lending rate once again. The last time the BoC increased the overnight lending rate increased stretches back to September 2010, when the Bank of Canada first moved the rate to 1.00%. The overnight lending rate had remained steady before a surprise cut to 0.75% in January 2015 — a rate that still stands today.
The BoC noted that inflation rose in January – a result of higher oil prices and newly implemented legislation on carbon pricing increased energy costs. The Bank of Canada however, maintained that other factors, such as the dollar and yields on bonds remain about where the BoC expected them to be. Gains in employment were certainly welcome, however; the Bank of Canada observed that wage growth and hours worked did not necessarily reflect the entire picture and that the Canadian economy still has room to grow before a higher overnight lending rate might be due.
The BoC also made reference to ‘significant uncertainties’ weighing on the horizon for the Canadian economy and maintained that their current policy (read: current rates) are appropriate for today’s economic landscape. Questions about possible protectionist policies from south of the border also weighed into the Bank’s latest decision, with possible “material consequences” on the Canadian economy should the U.S implement certain proposals.
Homeowners with variable rate mortgages can continue to celebrate the status quo provided by the Bank of Canada’s policies. Although there have been certain economic indicators perhaps pointing to a healthier Canadian economy, the rhetoric from the Bank of Canada indicates that they’d like to see a lot more strength before making a change.
The variable mortgage rate today continues to be an excellent option – especially for homeowners looking to pay down their mortgage aggressively. While the spread between fixed and variable mortgage rates has certainly thinned over the past few years, the variable rate certainly remains an appealing product, especially in light of the Bank of Canada’s recent statements.
If you have questions about your variable rate mortgage, or about variable rate products in today’s market, fill out the form at the top of the page and speak to a MonsterMortgage.ca mortgage expert today!