Last Wednesday, the Bank of Canada (BoC) raised its overnight target rate to 1.5% – up from 1.25%. This is the fourth increase since last June, when the target rate was 0.5%.
The timing is suspect to me. Last year, we had an increase around this time, but that was coming off of the hottest housing market in 29 years. We’re currently on the heels of a brutally slow spring market, yet rates are still rising? I don’t get it… this is a poor decision, in my opinion.
When it comes to four rate increases in the past year, there are facts, realities and perceptions that come into play… Continue reading “Why Did the Bank of Canada Raise Rates Last Week?!”
For more than a decade, I’ve been recommending Variable rate mortgages, as the product of choice. My clients have saved $thousands. It’s been a great 11 year run.. But now, the strategy has changed slightly. Read on, to see my newest recommendations..
QUICK VARIABLE RATE HISTORY.
First, you need to understand the history.. Variable rate had lots of pluses. It had a lower rate of interest, the penalty can never go over 3 months interest, and you have the option to lock into a Fixed rate at any time.
Being in a Variable meant paying lower rates. In fact, the difference, compared with Fixed rates, ranged between 1.00% and 3.00%. This translated to several $$thousand in less interest each year. Continue reading “Variable rate is out, Fixed rates are in…. But, which term…?”
History tells us that mortgage rates usually drop leading up to an election. And 2015 has followed that trend. It started in January of this year, when the Bank of Canada (BOC) Governor, Stephen Poloz, shocked Economists with his surprise 0.25% Bank Rate cut.
(CanadaMortgageNews.ca readers will remember, not all were shocked, as I had predicted a rate drop just days earlier).
Then in July, the BOC Govr did it again.. this time, it wasn’t as much a shock. The Bank Prime was cut by another 0.25% after months of negative Economist data showed the Canadian economy was slowing. Continue reading “Rates usually drop leading up to a Federal election!”
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?”
FEAR..! They say fear motivates us to do things we shouldn’t. If you’ve been reading the News Headlines for the past several weeks, you’ve been hammered with RATE HIKE FEARS! Everyone was saying rates were gonna go up.
It wasn’t just speculation, it was a foregone conclusion. Almost factual! There were headlines even reporting how much of an impact these new ‘higher rates’ would affect our lives, our budgets, our house values, our savings, etc. We saw so-called ‘Experts’ recommending we lock into long term Fixed rates! There was one articles telling us we should consider selling out homes! I mean if you didn’t know better, you would think the sky was falling!
Panic was starting to set in for thousands of Canadians. I was getting calls from concerned consumers asking if they should be doing anything with regards to their mortgage, their investments, and other personal finances. Continue reading “Bank of Canada Rate cut is positive news… don’t listen to fear mongers.”