Bank of Canada Rate Announcement
July 13, 2017 | Posted by: Shayne Beeler
Bank of Canada Rate Announcement
Today, the Bank of Canada raised it’s overnight rate by 0.25% - this impacts the “Prime Rate” Canadian banks use and any borrowers with rates based on Prime (variable rates and Lines of Credit) will see an increase. Before we get too excited, let’s review some history on variable rate borrowing:
Historical data suggests variable-rate borrowers have paid less interest over time than fixed-rate borrowers. Although the past and future don’t always directly connect, studies have also found that variable-rate borrowers who lock in mid-term normally paid more than variable-rate borrowers who stayed in their variable term. There can be peace of mind in the certainty of your interest rate going forward if you lock into a fixed rate, but that doesn’t always equate to paying less interest over time.
If you’re a fixed-rate borrower, you’re already in a term with a defined cost until your mortgage matures. Please keep in mind regardless of your term, that every renewal is critical and we encourage you to contact us to further discuss your options. If you’re a variable-rate borrower, we suggest keeping rate increases in context. You’re likely already paying less than many of the fixed rate options currently available and we’d be happy to discuss a strategy going forward. While your variable rate may have increased, you’re also still in one of the most flexible low cost borrowing options available.
