Yesterday the Bank of Canada Held its overnight lending rate. This means that if you have a Variable Rate Mortgage then your rate should stay the same.
What does this mean to my Variable Rate Mortgage?
This rate announcement means that if you have a variable rate mortgage, Variable rate student Loan, Home Equity Line of Credit, Personal Line of Credit or Other Variable rate loan product, Your rate should stay where it is.
What is the Overnight Lending Rate?
Lending Institutions in Canada borrow their money from the Bank of Canada (overnight) the Bank of Canada Sets a rate that they charge the banks for the use of this money. Currently the overnight lending rate is rate is 0.50%. The Banks then Charge their customers a rate to borrow this money which is called the Prime rate. Currently the bank Prime Rate is 2.70%.(except for TD their Prime rate is 2.85% If you are a TD customer with a variable rate mortgage you should call a Mortgage Broker.
The Banks base the rate they charge people on their prime rate if the Overnight lending rate goes up then the banks raise their rates by the same amount. If the overnight rate goes down then the banks typically lower their rates. Typically. Recently all these savings were not passed on to consumers.
The overnight Lending Rate is a measure of how the Overall economy is doing. If they drop the rate they are trying to boost the economy (speed up a slow economy). If they raise the rate they are trying to cool down or slow down the economy. The key is to control Inflation (the rising cost of goods, AKA the buying power of your dollar). When they hold rates they are waiting to see more definitive data on the direction the economy is going.
Remember, when you read or hear stories in the media about interest rates going up or down ask two important questions 1. What interest rate? (fixed or variable) and 2. How does this impact my personal situation?
Please contact me if you have any questions about your personal situation.
Here is the Link: http://www.bankofcanada.ca/2017/03/fad-press-release-2017-03-01/
Have a great day