Bank of Canada Lowers Their Prime Rate to 0.5%
Yesterday, the Bank of Canada announced that they would be adjusting their prime lending rate and that the prime lending rate would be reduced to 2.5%. Please note that the banks/lenders did not lower rates as much and remain and we are seeing prime rates from 2.7% – 2.85% amongst the banks. This should hopefully have a direct impact on any variable rate mortgage(s), secured line(s) of credit, or personal line(s) of credit that you may have.
An under performing Canadian economy and slow global growth has forced the Bank of Canada to cut rates again-this time by 0.25%. The target for the overnight rate now sits at 0.5%. But, variable rate holders, don’t get too excited. Like the last rate cut back in January, many experts predict the banks won’t make a similar cut to the Prime Rate. Last time, they only passed down .15% of the .25% rate cut. But, one can always hope things will be different this time.
The Bank’s interest rate cut comes after Canada’s Real GDP “contracted modestly” in the first half of the year-a fact that has the country sitting on the brink of recession. In response, the Bank-which previous predicted the Canadian economy would grow by 2% this year-has adjusted its projection to 1% growth in 2015. The Bank anticipates the economy will return to full capacity in the first half of 2017. That being said, right now inflation still seems to be near the 2% target-the Bank judges the underlying trend in inflation is about 1.5 to 1.7 percent. Global growth is expected to strengthen over the second half of 2015, and Canadian GDP growth is expected to resume in the third quarter.
Even if variable rates don’t fall along with this recent interest rate announcement, at least they’re not going up. And if the economy really doesn’t start to pick up until 2017, they might stay low for a while longer.
If you’re in the market for a mortgage-whether it’s a new one, a refinance or a renewal-feel free to drop me a line to discuss your options. I’d love to chat!
The next Bank of Canada rate announcement is scheduled for September 9.
Remember to always call me first before renewing as I can help get the best rate even if you are staying with your current lender. My services are free and I might be able to put some cash in your pocket instead of the bank.
If you have questions or if I can help you obtain financing for your property please call me.
Thank you so much for your support!