Eight times per year, the Bank of Canada meets to determine what the base lending rate should be. Any change to this industry benchmark indicates a possible change to corresponding rates, such as interest rates for mortgages and additional types of consumer loans. This information is also a good indicator of the current status of the Canadian economy.
The Bank of Canada is maintaining its trend-setting interest rate at 1.25 percent today as its careful assessment of the timing of future hikes continues amid a backdrop of moderating growth.
Slower first-quarter growth was largely a result of the housing market response to stricter mortgage rules and sluggish exports. It is expecting the economy to rebound in the second quarter with 2.5 percent growth, in part because of rising foreign demand, to help Canada expand by two percent for all of 2018. The economy saw three percent growth in 2017.
"Canada’s economic growth has moderated, and the economy is operating close to capacity," the Bank said in its latest monetary policy report, which was released alongside the rate announcement.
The Bank reiterated it expects further interest-rate hikes to be necessary over time and that it will follow a cautious, data-dependent approach when weighing future decisions.
The Bank introduced three rate hikes since last summer in response to an impressive economic run for Canada that began in late 2016. But due, in part, to factors such as mounting trade unknowns, the Bank has not raised the rate since January.
When is it a good time to switch to a fixed interest rate?
Because every financial situation is different, a free consultation with your Broker is the absolute best way help you determine whether locking in at a fixed rate would be beneficial for you. This is heavily dependent on the specifics of your mortgage, and we encourage you to speak with your Broker to discuss the right direction moving forward for your particular situation. Some of the factors to consider include:
- What your current variable rate is
- How much time is left on your mortgage term; and
- What fixed rates are currently being offered
The next rate announcement will take place on May 30, 2018.
For up-to-date information on interest rates and other mortgage news, be sure to follow us on Facebook or Twitter. If you have questions about your mortgage or what this information means for you, please feel free to contact our office and speak to one of our Mortgage Brokers today.