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, October 30, 2019, the Bank of Canada maintained their overnight rate which in essence means no change to your interest rate.
After the most recent election, you will want to pay note to the changes that the Liberals proposed during the election.
– The First Time Home Buyer’s Incentive is here to stay. We should expect may be some changes and adjustments to the program, but it is here to stay which is great news for those looking to have the lowest possible mortgage payment.
– They also promised to create a national tax on vacant residential properties owned by non-Canadians who don’t live in Canada. What is unclear right now is the definition of ‘vacancy’ that this government will use. A dwelling that is never occupied, or a furnished second home that is vacant more than 6-months. Only time will tell us what this campaign promise means.
– They also promised to crack down on fraud and financial crimes in the real estate sector. What does this likely mean for you? As we are already seeing with lenders and banks, more paperwork from clients is required and larger due diligence to insure all the I’s are dotted and t’s are crossed. Don’t worry that’s what I am here for!
Now of course, with the fact that we are now in a minority government, we will have to wait and see what passes through the House of Commons. I will always do my best to keep you informed of any changes that will affect your current mortgage products.
To continue with the Bank of Canada news, here is an excerpt of the announcement and what they had to say about their decision:
“The outlook for the global economy has weakened further …ongoing trade conflicts and uncertainty are restraining business investment, trade, and global growth. A growing number of countries have responded with monetary and other policy measures to support their economies. Still, global growth is expected to slow to around 3% this year before edging up over the next two years. Canada has not been immune to these developments. Commodity prices have fallen amid concerns about global demand. Despite this, the Canada-US exchange rate is still near its July level, and the Canadian dollar has strengthened against other currencies.
Growth in Canada is expected to slow in the second half of this year to a rate below its potential. This reflects the uncertainty associated with trade conflicts, a continuing adjustment in the energy sector, and the unwinding of temporary factors that boosted growth in the second quarter. Business investment and exports are likely to contract before expanding again in 2020 and 2021. At the same time, government spending and lower borrowing rates are supporting domestic demand, and activity in the services sector remains robust. Employment is showing continuing strength and wage growth is picking up, although with some variation among regions. Consumer spending has been choppy but will be supported by solid income growth. Meanwhile, housing activity is picking up in most markets. The Bank continues to monitor the evolution of financial vulnerabilities in light of lower mortgage rates and past changes to housing market policies”.
All things considered, the Bank will continue to monitor the extent to which the global outlook as well as pay close attention to the expected slowdown in the Canadian economy and the impact that has on consumer spending and housing activity. Increases in the bank’s rate are definitely not on the short-term horizon for sure but instead a hint to possible downward adjustments if needed.
Fixed rates have dipped just slightly since the last announcement and are around 2.69% to 2.99% for a five-year fixed term.
Based on the anticipation that the prime rate will still remain low BUT fixed-term rates have increased slightly, I’d recommend that we chat – it might be worth switching to a fixed-term if your current variable rate mortgage is higher than a fixed term. Call me so I can calculate what your new payment would look like and also if it is suitable for you. I’ll be in touch again for the next announcement on December 4, 2019.
As we heard a lot of in the election, Canadians are suffering from billions of dollars of consumer debt. I wonder if I can ask a favor if you hear a friend or family member talk about going through a financially tough time – maybe I can help with some budgeting, credit counseling and debt consolidation options for them. In any of these cases, would you mind passing my contact information on to them – this is very much appreciated.
I’ll be in touch again for the next announcement on December 4, 2019.