- The prime rate remains at 3%.
- The Bank of Canada doesn't expect the economy to reach full capacity until the second half of 2014.
- Any increase to the prime rate since 1992 has only been by 0.25% at any ONE time, so you won't see a large significant increase all at once.
A few mortgage brokers out there have told me they can still get financing at 2.99% for a 5-year term, so borrowing money to buy a home is still remarkably cheap! That being said, always talk to a professional before making any important financial decision.
As you know, your variable rate mortgage, line of credit and/or student loans are all based on the Prime Rate and, as promised, here is your personal update from me on the recent Bank of Canada announcement on changes to their Overnight Rate which in most cases impacts your Prime Rate.
At 10:00 am EST, Wednesday January 23rd, 2013, the Bank of Canada again did what we expected them to do... they continued to maintain their overnight rate. What this means to you is that once again the prime rate on your mortgage, line of credit or student loan will not change and remains at 3.00%. This of course is fabulous news but as always, I like to remind you to make the most of the low payments you still have as the rate will increase in the future. Have you chatted to a financial advisor about a Tax Free Savings Account or some RRSP contributions to trigger a potential income tax refund next year as your payments continue to remain low? If you don't have a financial advisor, let me know and I'd be happy to recommend one to you.
Based on this news, the Bank doesn't expect the economy to reach full capacity until the second half of 2014.. much later than they projected. Based on this, they are unlikely to increase their rate in the foreseeable future with any change most likely to occur possibly as late as Fall 2013 to early 2014! Remember, that any increase to the prime rate since 1992 has only been by 0.25% at any ONE time, so you won't see a large significant increase all at once.
Fixed rates haven't changed much at all since the last announcement, at around 3.09% to 3.29% for a five year fixed term.
Based on this recent announcement, and the anticipation that the prime rate will still remain low for a while now, unless you feel otherwise, I'd recommend that you remain with your current variable rate product as the interest is lower than a fixed term rate right now. However, if having a fixed payment is important to you, call me so I can calculate what your new payment would look like and also if it is suitable for you. The next announcement on any change to the prime rate is March 6th, 2013 at which time I'll be in touch again.