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Posted 5 Comments on TD green or TD GREED?!. as they refuse to lower the Prime rate!! Consumer Debt

TD green or TD GREED?!. as they refuse to lower the Prime rate!!

greedy banker Yesterday’s rate cut announcement by the Bank of Canada (BOC) governor, Stephen Poloz, caught all Economists by surprise.  The BOC cut their overnight rate by 0.25%.   Historically, and traditionally, this meant that the Bank Prime rate would follow.  Bank Prime rate is 3.00% and we expect it to fall to 2.75%TD.

But HOLD ON!…Today, it’s the BOC governor, Poloz, that will be surprised as TD Bank says they WON’T  be cutting their Bank Prime rate!  The BOC cut the rate to help stimulate the economy.  Businesses borrow commercial funds priced against Bank Prime… and consumers borrow lines of credit and Variable rate mortgages against Bank Prime. Continue reading “TD green or TD GREED?!. as they refuse to lower the Prime rate!!”

Posted 1 Comment on Interest rate surprise? Not to our readers! : Bank of Canada drops key lending rate to 0.75% Bank News

Interest rate surprise? Not to our readers! : Bank of Canada drops key lending rate to 0.75%

big newsLast week, I made a bold statement about interest rates.   I said rates will remain low for some time.   And they could even decline.

That forecast was met with a certain degree of criticism.    Well, no surprise for CanadaMortgageNews.ca followers, the Bank of Canada cut the rate by 0.25% to 0.75%.

This means Variable Mortgage rates will fall by 0.25%.   It also means we’ll probably see fixed rate mortgages also fall….. As I predicted.

Stay tuned for more details on this…

http://www.ctvnews.ca/mobile/business/key-interest-rate-unexpectedly-lowered-1.2198493

Your best interest is my only interest.   I reply to all questions and I welcome your comments.  Like this article?  Share with a friend.

Steve Garganis 416 224 0114 steve@mortgagenow.ca

Posted 2 Comments on Bank of Canada says no rate hikes, but possible rate drops!! Mortgage News

Bank of Canada says no rate hikes, but possible rate drops!!

stephen poloz  Last week, the Bank of Canada governor, Stephen Poloz, held the first of 8 scheduled meetings to set the Target Rate.    This is the rate used to set the Bank Prime rate which currently sits at 3.00%.   No surprise, no change in the rate.  It has been the same since Sept 2010.

From 2011 to 2013, the previous Bank of Canada governor, Mark Carney, continually announced of a pending rate increase.   But late last year, Poloz changed the tide when he announced it could be a few years before rates go up.   One of the key drivers for rate hikes is inflation.  The BoC target for inflation is between 1% and 3%.  If inflation goes above 3%, we can expect rate hikes.

Inflation is not a concern.  In fact, there are concerns about deflation as the current inflation rate sit at 1.2%.  Some experts believe we could see the BoC rate drop.  Great news for anyone in a Variable rate.   We are also seeing the govt of Cda bond yields drop.   Friday’s close was down to 1.59% for 5 yr bonds.  Haven’t seen that level since June 2013.   This means Fixed mortgage rates will probably go down further. Continue reading “Bank of Canada says no rate hikes, but possible rate drops!!”

Posted Mortgage News

Unexpected job loss report and effect on mortgage rates.

unemployment Last week’s Employment Stats shocked everyone when we didn’t see the expected 14,000 new jobs created as Economists were expecting.  Instead, we got hit with a reported 46,000 jobs lost in December.    Economists aren’t always accurate with their forecasts (news flash) but they usually aren’t this far off either. We won’t look at why they miscalculated here, but I do want to look at the effects of this bad news on your mortgage.

EFFECT ON FIXED MORTGAGE RATES

Higher unemployment and job loss is never a good thing.  We’re not celebrating here.   But we need to understand how it affects our mortgage rates.     When it comes to rates, bad economic news is good news.    And we saw the effects almost immediately.  Bond yields dropped by around 0.15% to 1.73%, taking the pressure off Lenders to raise rates (fixed mortgage rates are priced closely to Govt of Cda bond yields).   This means fixed mortgages won’t go up anytime soon and could even fall should the bond yields remain at this level. Continue reading “Unexpected job loss report and effect on mortgage rates.”

Posted Mortgage News

You heard it here first!… Rule of thumb for choosing Variable over Fixed.

First For the past few years, the Bank of Canada has warned us about the imminent interest rate hikes.   Reminds me of the boy that cried wolf.    “Interest rates are going up…  soon!…  real soon…. really, really soon!!”   But last week, the new Bank of Canada Governor, Stephen Poloz, surprised many experts when he said rates would remain low for quite a while.

This announcement prompted many advisors to jump on the Variable Rate bandwagon and start recommending Variable rate over Fixed rate.   I agree…  Variable rate is the obvious choice for most of us today.   But I also noticed a familiar rule of thumb being quoted in the media.   So I wanted to set the record straight. Continue reading “You heard it here first!… Rule of thumb for choosing Variable over Fixed.”