At 10:00 am EST, Wednesday May 29, 2013, the Bank of Canada again did what we expected them to do… they continued to maintain their overnight rate.
What this means to you is that once again the prime rate on your mortgage, line of credit or student loan will not
change and remains at 3.00%.
Here is an excerpt of the announcement from the Bank of Canada and what they had to say about their decision:
“ In the United States, the economic expansion is progressing at a modest pace, with continued strengthening in private demand partly offset by fiscal consolidation. Japan’s economy is beginning to respond to significant policy stimulus. Europe, in contrast, remains in recession. Growth in China has continued to ease from very strong rates, weighing somewhat on global commodity prices.
In Canada, recent economic indicators suggest that growth in the first quarter was stronger than the Bank projected in April. For the year as a whole, growth is expected to remain broadly in line with the Bank’s forecast. Over the projection horizon, consumer spending is expected to grow at a moderate pace, business investment to grow solidly, and residential investment to decline further from historically high levels. Growth in total household credit is slowing and the Bank continues to expect that the household debt-to-income ratio will stabilize near current levels. Exports are projected to continue to recover, but to be restrained by subdued foreign demand and ongoing competitiveness challenges, including the persistent strength of the Canadian dollar .”
Based on this news and the ongoing slack in the Canadian economy and the muted outlook for inflation, the Bank does not expect to increase their rate in the foreseeable future with any change most likely to occur possibly as late as late 2013 to early 2014! 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 changed at all since the last announcement, at around 2.89% to 3.09% for a five year fixed term. 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. If you are in a fixed term mortgage with a rate over 3.50%, contact me to run an analysis to see if an early renewal might make economic sense.
The next announcement on any change to the prime rate is July 17th, 2013.