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Bank Of Canada Announcement October 19: So with the leaves falling comes the beautiful colours’ of fall and some great news as well…

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 19, 2016, the Bank of Canada again maintained their overnight rate which in essence means no change to your interest rate. I feel like I have been repeating myself over and over again as they haven’t increased the rate since July 2007 – nine years ago! You continue to benefit from low rates which for sure puts a smile on your face.

In the last few weeks there has been a lot of changes in the mortgage legislation and qualifying guidelines all in the hope of stabilizing the real estate market as well as ensuring home owners and those with significant debt can handle future interest rate increases. An announcement today further confirmed that even refinancing your home in the future to pull equity might result in limited options and tighter qualifying. With all of this comes a lot of confusion and most importantly, how will all these changes potentially impact you and your plans for borrowing funds in the future – whether it is refinancing to maximize the low interest rates and equity in your home, purchasing rental properties or moving up into a bigger home? Call me now for a pro bono consultation to review your current financial situation and let’s start planning now. Some of these legislation changes don’t come into effect until November 30th, 2016 so let’s make sure we get you prepared now and ensure the changes won’t impede your future borrowing plans.

To continue with the Bank of Canada news, here is an excerpt of the announcement and what they had to say about their decision today:

“The global economy is expected to regain momentum in the second half of this year and through 2017 and 2018. After a weak first half, the US economy in particular is strengthening: solid consumption is being underpinned by strong employment growth and robust consumer confidence. However, because of elevated uncertainty, US business investment is on a lower track than expected.

Looking through the choppiness of recent data, the profile for growth in Canada is now lower than projected. This is due in large part to slower near-term housing resale activity and a lower trajectory for exports. The federal government’s new measures to promote stability in Canada’s housing market are likely to restrain residential investment while dampening household vulnerabilities. Recent export data are improving but are not strong enough to make up for ground lost during the first half of 2016, despite the effects of the Canadian dollar’s past depreciation. Growth in exports over 2017 and 2018 are projected to be slower than previously forecast, due to lower estimates of global demand, a composition of US growth that appears less favourable to Canadian exports, and ongoing competitiveness challenges for Canadian firms.

After incorporating these weaker elements, Canada’s economy is still expected to grow at a rate above potential starting in the second half of 2016, supported by accommodative monetary and financial conditions and federal fiscal measures.”

Given the downward revision to economic growth, the Bank considers the risks around its updated inflation outlook to be roughly balanced, albeit in a context of heightened uncertainty. It is still anticipated that rates won’t start increasing until well into 2017 depending on how the recent changes will impact the economy. 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 really changed at all since the last announcement, and are around 2.39% to 2.59% for a five-year fixed term.

Recap: Bank Of Canada Announcement October 19

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. I’ll be in touch again for the next announcement on December 7, 2016.

I wonder if I can ask a favour, going with my theme of “Let the sun set and the leaves fall along with Canadian consumer debt with our help” if you hear a friend or family member talk about going thru a financially tough time – maybe I can help with some budgeting, credit counselling 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.

Kelly Wilson Top 1% Mortgage Experts in Canada