The leaves are falling, but the sky is not! We know this year has had a lot of changes in the lending landscape, so let’s chat about what this means for you!
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 25, 2017, the Bank of Canada maintained their overnight rate which means no change to your interest rate. I know you may be feeling the impact of the rate changes earlier in 2017, but you can feel at ease that your rate will stay the same for now.
In the last few weeks there have been additional changes in the mortgage legislation and qualifying guidelines all in the hope of maintaining stability in the real estate market as well as ensuring home owners and those with significant debt can handle future interest rate increases. These changes will impact 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 complimentary consultation to review your current financial situation and let’s start planning now. These legislation changes don’t come into effect until January 1, 2018, 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 on Wednesday:
“Canada’s economic growth in the second quarter was stronger than expected, and was more broad-based across regions and sectors. Growth is expected to moderate to a more sustainable pace in the second half of 2017 and remain close to potential over the next two years, with real GDP expanding at 3.1 per cent in 2017, 2.1 per cent in 2018 and 1.5 per cent in 2019. Exports and business investment are both expected to continue to make a solid contribution to GDP growth. However, projected export growth is slightly slower than before, in part because of a stronger Canadian dollar than assumed in July. Housing and consumption are forecast to slow in light of policy changes affecting housing markets and higher interest rates. Because of high debt levels, household spending is likely more sensitive to interest rates than in the past.
The Bank estimates that the economy is operating close to its potential. However, wage and other data indicate that there is still slack in the labour market. This suggests that there could be room for more economic growth than the Bank is projecting without inflation rising materially above target. Governing Council will be cautious in making future adjustments to the policy rate. In particular, the Bank will be guided by incoming data to assess the sensitivity of the economy to interest rates, the evolution of economic capacity, and the dynamics of both wage growth and inflation.”
Based on this outlook, the Bank estimates that the economy is operating close to its full potential. But they have indicated that they will be cautious in making future increases in order to determine the impact of the adjustments earlier this year. Remember, taking advantage of these low rates is a great way to pay down your mortgage faster!
Fixed rates haven’t really changed at all since the last announcement, and are around 3.09% to 3.39% for a five-year fixed term.
Currently variable rate products are still lower than current fixed term rates, however if concern regarding impending rate increases is going to affect your monthly budget, locking in now might be a good option. Call me to book a complimentary consultation and let’s discuss your current financial situation. I’ll be in touch again for the next announcement on December 6, 2017.
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 through 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.