July 17, 2012
Bank of Canada Interest Rate Announcement – July 17, 2012
As you know, your variable rate mortgage, lines of credit and/or student loans are all based on the Prime Rate and as promised, here is your personal update from us on the recent Bank of Canada announcement on changes to their Overnight Rate which in most cases impacts your Prime Rate.
At 9:00 am EST, Tuesday July 17th, 2012, the Bank of Canada again did what we expected them to do… they maintained their overnight rate. What this means to you if you have a variable rate mortgage or Home Equity Line of Credit, is that the prime rate on your mortgage will not change and remains at 3.00%. This is great news as you still have a great low rate and so continue to make the most of the low payments you will still have and maybe chat with a financial adviser about a Tax Free Savings Account or some RRSP contributions to trigger a potential income tax refund next year! If you don’t have a financial adviser, let us know and we’d be happy to recommend one to you.
Here is an excerpt of the announcement from the Bank of Canada and what they had to say about their decision:
“While the economic expansion in the United States continues at a gradual but somewhat slower pace, developments in Europe point to a renewed contraction. In China and other emerging economies, the deceleration in growth has been greater than anticipated, reflecting past policy tightening and weaker external demand. This slowdown in global activity has led to a sizeable reduction in commodity prices, although they remain elevated. The combination of increasing global excess capacity over the projection horizon and reduced commodity prices is expected to moderate global inflationary pressures.â€
The overall economic momentum in Canada is still sluggish but the Bank expects that growth will slowly continue. Based on this outlook, they have indicated they are unlikely to increase their rate in the foreseeable future although very much dependent on the continued trend. A change is likely to occur in 2013, it is expected to be gradual and controlled in line with economic recovery, both in Canada and globally. Remember any change to the prime rate since 1992 has only been by 0.25% at any ONE time.
Fixed rates haven’t changed much at all since the last announcement, at around 3.19% to 3.39% for a five year fixed term. Please feel free to call us anytime if you would like to compare your current rate with today’s rates and explore options regarding early renewal, switching to a new lender and / or refinancing your mortgage to take advantage of today’s attractive rates.
Based on this recent announcement, and the anticipation that the prime rate will still remain low for a while now, many borrowers with variable rate products still feel comfortable floating as the interest rate is lower than a fixed term rate right now. However, if having a fixed payment is important to you, call us so we can calculate what your new payment would look like and decide if it is suitable for you to lock in now with your lender. The next announcement on any change to the prime rate is September 15, 2012 at which time we will be in touch again.
Warm Regards,
Chana Fay Charach, AMP
President, VERICO Synergy Mortgage Inc.
Office: 604.269.9419
PS: We would like to ask you a favor – rates are so low right now making it a great time for first time home buyers, buying an investment property or refinancing especially as we can hold rates for up to six months, if you know of someone that is looking for advice on their mortgage options, with no obligation, would you please pass on our contact information– your referrals are the biggest compliment we can receive and are very much appreciated. Thank You!
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