TagBig Six Banks

Posted February 24, 2015 Interest rates

Will Variable rates increase as Bank Prime drops?

Here’s a warning to all…. Watch out for the BANKS to increase their Variable rate mortgage pricing. History tells us that when the Bank of Canada lowers their Target Rate, and the Bank Prime falls, Variable rate mortgage pricing increases.

If you have a mortgage coming due in the next 4 months, speak with a mortgage broker to get you a rate hold immediately!

Today, you can get Prime less 0.65% on a Variable rate mortgage. That’s 2.85% – 0.60% = 2.20%. THIS PRICE COULD DISAPPEAR! 2.20% is a great rate! No one would argue that. The BANKS are counting on you to be content with that 2.20% rate. On March 4th, the Bank of Canada meets again to set the Target Rate. And all indications point to another 0.25% reduction. Continue reading “Will Variable rates increase as Bank Prime drops?”

Posted January 29, 20153 Comments Bank News

BIG SIX BANKS finally cut Prime rate.. Well, sort of…!

Last week, the Bank of Canada (BoC) cut their overnight rate by 0.25%. The move surprised all the so-called ‘Financial Experts’… (well, not me… As I had suggested rates were likely to drop in the previous week’s article and also in the previous month).

Our BIG SIX BANKS had their own surprise for us. Instead of passing along the usual rate cut to consumers, they sat on their hands and did nothing. In fact, TD Bank felt good about it and made public statements about how their Bank Prime rate wasn’t fully influenced by the BOC rate. (That’s such a load of bull, you can almost smell it coming out of your screens!)

And also last week, the Banks immediately cut the rate they pay you on your savings by that same 0.25%. Continue reading “BIG SIX BANKS finally cut Prime rate.. Well, sort of…!”

Posted January 23, 20155 Comments Consumer Debt

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

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%.

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 October 8, 20142 Comments Bank News

Senior Deputy Governor says lower rates are the new normal.

In her first public speech as Senior Deputy Governor for the Bank of Canada, Carolyn Wilkins brought some good news to Canadians with mortgages. Interest rates should remain low for some time….. and we can expect lower rates to be the “new normal”.

Ms. Wilkins went on to say that “the recovery has had repeated false starts and still faces considerable headwinds.” This seems to be the new message coming from the Bank of Canada. And I must say, it’s a refreshing change from the previous high-profile Governor, Mark Carney.

UNPOPULAR COMMENTS

Remember our previous Bank of Canada governor? Mr. Carney earned high praise for helping Canada avoid any U.S. style recession. But in the years leading up to his 2013 departure, his repeated warnings of pending interest rate hikes never materialized. In fact, we now know they were way off. Interest rates went down and have stayed down. Looking back, Carney’s rate hike warnings sounded more like ‘the boy who cried wolf’. Continue reading “Senior Deputy Governor says lower rates are the new normal.”

Posted August 13, 20143 Comments Interest rates

Variable or Fixed? an update on how to choose.

FIXED OR VARIABLE?

The debate over fixed vs variable never seems to end. For the past 5 years, the Federal govt and the BIG SIX BANKS have been doing everything in their power to force us into choosing a 5 year Fixed rate. The govt says it gives us security and protection against the anticipated interest rate hikes. BANKS jumped on this bandwagon because 5 yr fixed is the most profitable mortgage product.. and with fixed rates hovering at 3.00% for the last 3 years, it’s been an easy sell.

On the surface, it’s not bad advice. Fixed rates were supposed to go up. The spread between Fixed and Variable has been less than 1.00% over the last 3 years. My rule of thumb is that Variable rates should be 1.00% lower than 5 yr fixed in order to benefit from the possible rate fluctuations. So naturally, 5 yr fixed was a better choice.

DO YOU TRUST YOUR GOVT AND YOUR BANK? Continue reading “Variable or Fixed? an update on how to choose.”