BANK OF CANADA MAINTAINED THEIR RATE
Firstly, a very Happy New Year to you and your family – if one of your New Year’s Resolutions was to get back on track with your financial goals and wealth growth plans, now is a perfect time. This is the first of many announcements this year about interest rate changes that will impact a majority of your current and future debt – from mortgages and lines of credit to credit cards and personal loans. My New Year’s Resolution to you is to help ensure that the impact of interest rate changes to you is minimal – advising you on ways to have more of your hard-earned cash stay in YOUR pockets and doesn’t line someone else’s – saving you thousands in unnecessary interest along the way – imagine what you could do with an extra $5,000 or $6,000 this year? You may have already heard that the impact of recent mortgage legislation and qualifying changes has already impacted the borrowing power of many home buyers and owners, and we have also seen fixed term rates rise slightly. Just today one of the default insurers, CMHC, announced that they will be increasing their default insurance premiums effective March 1, 2017 – this typically only impacts those with less than 20% down payment. Now, more than ever, the benefits of receiving a pro bono consultation from your mortgage broker is key to ensuring you make the right decision on your biggest financial obligation while protecting your biggest asset – your income! _________________________________________________________________________________________________ TODAY This communication is going to focus on what the Bank of Canada had to say today and how that impacts you – reach out to me for a pro bono consultation on what we can do now to meet your 2017 financial wealth and freedom goals and start to save you some unnecessary interest. 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 Prime Rate. At 10:00 am EST, Wednesday January 18, 2017, the Bank of Canada again maintained their overnight rate which means no change to variable interest rate mortgages. This is great news to start the year off as you continue to benefit from low rates which for sure puts a smile on your face as the temperature outside is a little frosty. Given the assumptions the bank made in its forecast, they are expecting an upward swing in economic growth in 2017 anticipating to reach full capacity by mid-2018. It is still anticipated that prime rates won’t start increasing until well into 2017 but we are being given the heads up that they will start increasing eventually. 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 have increased slightly since the last announcement, and are around 2.69% to 2.89% for a five-year fixed term. Also, remember that the prime rates and fixed term rates are impacted by two different sets of economic drivers and so increases in fixed rates doesn’t always mean the same increase in prime rates and vice versa. Based on this recent announcement, and the anticipation that the prime rate will still remain low for a while now, unless you feel otherwise, I’d recommend that you remain with your current variable rate product as the interest is still lower than a fixed term rate right now. However, 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. I’ll be in touch again for the next announcement on March 1, 2017.