The Bank of Canada has maintained its overnight lending rate at 1 per cent – for the 16th consecutive time. What does this mean for borrowers and investors alike – and will the rate rise any time soon?
The CMHC had added their predictions to the cooling housing market pile – and they’re fortunately less extreme than past calls of a 10 per cent drop. While they’re forecasting a slowdown in pricing, new construction and existing home sale figures, Canada’s housing market is still sitting pretty compared to the U.S., where 4 million homeowners are now underwater on their mortgages.
It’s been an eventful week for the mortgage market as we saw 5 year fixed rates drop to an all time new low, and contended with whispers of a forecasted housing market crash, prompting the question – will prices drop with a thud, or are we simply witnessing the effects of a cooling market?
This week we saw the Bank of Canada stick to their guns, announcing they would hold their rate of 1 per cent in their July announcement. In new mortgage rule news, lenders are responding to the guidelines in different ways, with some banks applying limitations to their conventional mortgage products as well – and credit unions may provide options for those looking to skirt the new HELOC and cash-back mortgage rules.
Recent finance headlines are full of news on the Barclays Libor scandal. For those not familiar with the global interbank lending interest rate, the news puts into question the validity of trillions of dollars in loans granted between 2006 and 2008. Will Canadian finances be affected? If their bank used this benchmark rate to trade with international financial institutions during this time period, they very well could be.
Today the Bank of Canada announced that once again (for the 13th consecutive time over the past 19 months) that there will be no change to the overnight lending rate. This pleases variable rate mortgage holders since there are no alterations to the bank’s Prime lending rate and therefore no increase to their own mortgage rate and monthly mortgage payments.
RateSupermarket.ca’s expert mortgage panel predicts hike in fixed rates, but stability in variable rates this month. The spring real estate frenzy has started early this year, perhaps due in part to record low fixed mortgage rates in March. Sadly for borrowers, all good things must come to an end. To paraphrase the old saying, “what goes down must come back up.” As such, fixed rates are expected to rise this month, according to some experts. Conversely, RateSupermarket.ca’s Mortgage Rate Outlook Panel is anticipating variable mortgage rates to remain unchanged in April.
Recent fluctuations in variable and fixed mortgage rates have left Canadian consumers confused about future mortgage trends. The good news is that February should be less volatile, with RateSupermarket.ca’s Mortgage Rate Outlook Panel anticipating both fixed and variable mortgage rates will remain level during the month.
This past Tuesday the Bank of Canada had their first meeting of 2012 to discuss any changes they were going to make to the overnight lending rate. Low and behold … no change. This came as no big surprise to Canadians and the overnight rate remains steady at 1%. FYI the next meeting is scheduled for March 8th, 2012. How does this impact the mortgage industry exactly?
In the red corner… currently weighing in just under the Canadian Prime lending rate at Prime – 0.25%… the 5 year variable rate. And in the blue corner… currently weighing in around 2.99% (new rate advertised January 13, 2012)… the 5 year fixed rate. LET’S GET READY TO RUMBLE!!!!