The Bank of Canada (BOC) left rates unchanged today, however the tone of their statement had a hint of optimism.
The main points in today's message were that the global economy is still moving forward, employment in Canada is improving and business investment is picking up. The last point is critical since the it's the key ingredient to sustained economic growth.
Key Points From The Bank of Canada Announcement
- Prime rate not changed
- US growth slows this quarter
- Business investment picks up (finally!)
- Canadian exports still weak
- Economy has adjusted to lower oil prices
How Your Mortgage Is Impacted
- Prime rate remains at 2.7%
- Fixed rates have decreased due to spring market
- Variable mortgage rates expected to stay the same until mid 2019
- Rate holds for purchases or maturities now available until late September 2017.
Interest rates for the next quarter
There is a sea of noise in North America right now that should keep interest rates low for the next quarter. Policy changes in the US should be limited what with the summer session soon upon us, and the fact that President Trump is fighting off the lions from all sides. With NAFTA potentially being ratified or even ripped up, the BOC will be forced into a wait and see stance until things get clearer. The only wild card that could impact rates is increased legislation from the federal government. Currently the finance minister is reviewing measures that will require the banks to hold more capital reserves for their mortgages. If this comes into effect it could raise rates by 0.5%. So stay tuned!
As I always mention at the close of my updates, if your mortgage is maturing in the next 4 - 5 months, a bit of planning now could save you a lot of money. Gives us a call to book an appointment in our new office!
The next Bank of Canada meeting is July 12th, 2017
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