Variable Rate Update – Reaching Escape Velocity?
March 9, 2016
The Bank of Canada (BOC) left the prime rate unchanged today. Though the economic growth is in the lower range of the bank’s 2% target range, the wording of the bank’s announcement suggests that it will wait for previous rate cuts take effect. It’s clear that any increases in prime are off the table since the bank is expecting the economy to grow at 1.5% in 2016 and 2.5% in 2017. Since the BOCs growth target rate is 2%, I would even speculate that 2017 might not see any rate increases.
Key Points From The Bank of Canada Announcement
- Prime rate not changed
- Inflation remains at the bottom of the BOCs target range
- China’s economic slowdown impacting commodity prices
- Oil prices to drop further as economic sanctions are lifted from Iran
- Canadian manufacturing exports continue to grow due to a weaker dollar
How Your Mortgage Is Impacted
- Prime rate remains at 2.7%
- Fixed mortgage rates have increased with rates moving up 10bps to 20bps
- Variable rate discounts to prime continue to decrease over the past month
- Rate holds for purchases or maturities is now available up to the end of May
Wondering how to structure your mortgage for 2016?
Give me a call! We can discuss how your current financial situation fits into today’s economic environment and how the right mortgage strategy could save you thousands of dollars over the term of your mortgage.
The next meeting for the Bank of Canada is March 09, 2016
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