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 has opted to hold their benchmark interest rate at its current level at 1.25 percent today.
The Bank has introduced three rate hikes since last summer, including an increase in January this year. The moves came in response to an impressive economic run for Canada that began in late 2016. Ahead of the announcement, governor Stephen Poloz was widely expected to hold off moving the rate because of weaker economic numbers in recent weeks and the expanding trade uncertainty. "Trade policy developments are an important and growing source of uncertainty for the global and Canadian outlooks," the bank said.
In its statement, the Bank reiterated it expects more hikes to be necessary over time, but that the governing council will remain cautious when considering future decisions.
The council will continue to be guided by incoming data, such as the economy’s sensitivity to higher rates, the evolution of economic capacity and changes to wage growth and inflation, it said. In monitoring the country’s housing data, the bank said a surge of strong numbers in late 2017 was followed by softer figures early this year. This suggests “some pulling forward of demand ahead of new mortgage guidelines and other policy measures,” the bank said.
The Bank said the impacts on inflation and growth from commitments in last month’s federal budget would be incorporated into its April projections.
Is now 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 April 18, 2018.
For up-to-date information on interest rates and other mortgage news, be sure to follow Innovative Mortgage Solutions 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!