Eight times a year the Bank of Canada (BoC) meets to determine what the base lending interest rate should be. Any change to this rate influences rates such as Mortgages and other customer loans. It also is a good indicator for the current Canadian economy.
The Bank of Canada has yet again announced that they will be maintaining its overnight lending rate at 1 per cent. This means the prime rate for borrowers will remain at 3 per cent.
Inflation rate in Canada remains below 2 per cent but has climbed more than expected over the past year due to the effects of the lower Canadian dollar and some other sector-specific factors. As well Oil prices have continued to fall which has eased the global financial conditions even further and will also weigh into the direction of the Canadian economy and may pose a downside risk to the inflation profile. However on the flip side, the U.S. economy has began to recover and strengthen which has benefited Canada’s exports which is being reflected in the increased business investments and employment. Overall, the balance of risks remain within an reasonable zone, as the economic growth is believed to take steps in a self-sustaining direction; therefore the overnight rate remains at a 1 per cent.
If you are in the market for a new Mortgage, or are looking to renew or make some changes to your current Mortgage and are wondering if a variable rate is suitable for you, please feel free to contact our office.