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The Bank of Canada (BOC) left the prime rate unchanged today but the Governor is expecting growth to return in the third quarter of 2016. The wording in the BOCs statement was mainly focused around the disruption in oil production due to the fire in Fort McMurray and the economic growth coming from the US. The BOC continues to express its frustration with the lack of investment from businesses since the consumer can only hold up the economy for so long.
Key Points From The Bank of Canada Announcement
- Prime rate not changed
- US economy pointing to solid growth
- Economic growth in line with estimates
- Solid fundamentals in the US will help CDN exports
- Business capital investment still not materialising
How Your Mortgage Is Impacted
- Prime rate remains at 2.7%
- Variable rate mortgage discounts getting better
- Fixed rates remain low … for now
- Rate holds for purchases or maturities now available until the end of September
Where are rates heading?
The impact from the devastating Alberta fires is expected to slow the economy by 1 1/4 percent, however, growth in the US economy and the resumption of oil production should get things back on track. The question is will the economy go back to where it was at in the beginning of May, or will it surpass it? If it surpasses the May point, that could impact fixed mortgage rates and open the door for an increase in prime by Mid 2017. One thing for sure, the conversation of negative interest rates seems to be off the table.
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 Bank of Canada meeting is July 13th, 2016
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