March Variable Rate Update

Good morning,

As you know, your variable rate mortgage, line of credit and/or student loans are all based on the Prime Rate and 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 March 5th, 2014 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 is fabulous news but are you still making the most of the low payments you still have, as the rate will increase in the future.   No doubt you are getting ready to file in 2013 Income Tax Return – are you getting a refund?   Give me a call and we can chat about helping you make the most of that refund and the savings you continue to make on your mortgage – I have some great budgeting and savings strategies for you – let me know as I would be happy to assist.

Here is an excerpt of the announcement from the Bank of Canada and what they had to say about their decision today:

The global economy is evolving largely as anticipated, with growth expected to strengthen in 2014 and 2015. The United States is still expected to lead the acceleration in advanced economies, although recent data have been softer, largely owing to weather effects. Volatility in global financial markets has increased somewhat, reflecting buoyant market conditions in most advanced economies and increased risk differentiation among emerging markets. More recently, tensions in Ukraine have added to geopolitical uncertainty.  In Canada, economic growth in the fourth quarter of 2013 was slightly stronger than the Bank anticipated.  Although  exports have been a little stronger than previously thought but continue to underperform, and overall business investment has yet to pick up.”

Just as before, the Bank still does not expect to increase their rate in the foreseeable future with any change most likely to occur late 2014 or even not until 2015!   They need to wait to see economic growth continue on a more upward direction and become more sustainable long term.  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 dropped just slightly since the last announcement to around 3.09% to 3.39% 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 April 16th, 2014 at which time I’ll be in touch again.

I wonder if I can ask a favour – this is a great time for first time home buyers who are thinking of purchasing this Spring to start with a pre-approval plan now to get them on track and save unnecessary interest.  Also if you hear a friend or family member talk about going thru a financially tough time – maybe I can help with some budgeting and debt consolidation options for them.  In either of these cases, would you mind passing my contact information on to them – this is very much appreciated

Yours truly,