The first of the year and most anticipated interest rate announcements in recent years came this morning at 10:00am (January 20, 2016). The decision is that the Bank of Canada will be maintaining it's overnight rate, which means there will be no changes to prime rate. There was much speculation that there would be a cut this time around with many economists predicting a 50/50 chance. Really just another way of them saying that your guess is as good as theirs. Many were expecting a cut this morning.
There is still a good chance that we will see a decrease again to prime before the spring time. Even if they were to cut the rate, it will be interesting to see how banks react. There is some speculation that banks will simply ignore another rate cut. We'll see. There were two cuts to prime rate early in 2015 and banks have yet to match the full cut.
For now, the prime rate remains 2.70%.
There has not been an increase to prime rate since September 2010 which is the longest streak in history.
This discounts on variable rate mortgages have been shrinking since August, likely do to anticipation of another rate cut. You can still get a variable rate as low as prime -0.60% with most banks being at around prime -0.10%. A huge gap.
Prime rate and fixed mortgage rates are unrelated. While variable rate mortgages and lines of credit are affected by prime rate, fixed mortgage rates are determined by bond yields which have declined steeply since the beginning of the year.
5 year fixed mortgages are available as low as 2.49%
You can read about the announcement yourself here:
http://www.bankofcanada.ca/2016/01/fad- ... 016-01-20/The next interest rate announcement will be on March 9th, 2016
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Paul Meredith
Mortgage Broker
CityCan Financial (est 1976)
416-409-8009
http://www.easy123mortgage.capaulm@citycan.comLic#10532
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