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PostPosted: Wed Sep 06, 2017 9:21 am 

Joined: Fri Feb 01, 2008 2:35 pm
Posts: 527
Following the last interest rate increase by the Bank of Canada on July 12th, it's been predicted that there will be at least one more rate hike before the end of the year. This mornings interest rate announcement reflected just that. Another rate hike of 0.25%. As with the last rate hike, it's almost certain that banks and other mortgage lenders will waste no time in increasing their prime rate to reflect the change, which would then set it at 3.20%. The announcement came at 10am this morning, September 6th.

Just as with the last rate announcement, there has been lots of buzz around this highly anticipated event. We can't say this has been unexpected as there was plenty of warning from the Bank of Canada that another hike was coming. This may not be the lasts one either. Back in 2010, we saw three rate hikes within just a few short months. This could very well happen again.

The prime rate is currently 2.95%... for now. Banks will soon announce increases to their prime rates, which could come as soon as later today. The non-bank lenders will then follow.

This movement to prime rate typically only affects those with variable rate mortgages and Home Equity Lines of Credit (HELOC). However, as this has only been the second increase to prime rate in 7 years, it could very well start pushing bond yields higher, which would then put upward pressure on fixed rates as well. One lender increased all their rates last night in anticipation of this move. I won't call them out by name, but let's say they have a red logo and their name rhymes with 'Motiabank'. Okay, those are some pretty easy clues!

Bond yields are up over 4% today already which is now putting pressure on fixed rates.
You can follow the bond yields here: https://www.investing.com/rates-bonds/c ... bond-yield

On a lighter note, we have now seen discounts on variable rate mortgages fall to as low as prime -1.05%, which is 2.15%.. once we factor in the increase. As with most of the lower rates these days, this is for high ratio purchases or switches only. Meaning, purchases with LESS than 20% down payment or switches where your original purchase was made with less than 20% down.

You can read the full announcement here: http://www.bankofcanada.ca/2017/09/fad- ... 017-09-06/

The next interest rate announcement will be on October 25th.

Paul Meredith
Mortgage Broker
CityCan Financial (est 1976)

Follow me on Twitter! http://www.twitter.com/paulmeredith

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