Categories for Bank of Canada

You Can Still Count on Rock-Bottom Rates, Says BoC

—The Mortgage Report: Nov. 27— If you’re out there mortgage shopping, BoC chief Tiff Macklem had a message for you Thursday: “We want to be very clear, Canadians can be confident that borrowing costs are going to remain very low for a long time.” It’s a mantra he’s repeated for months. Among the reasons: “…The economy still has more than...

How Far We’ve Come

—The Mortgage Report: Nov. 17— Remember that rate: 8 3/4%? Your average first-time buyer wouldn’t, as he/she would’ve been just seven years old at the time (1991). 8.75% was a tremendous 1-year fixed rate back then. But man, did it take a bite out of people’s budgets. Consider that on a standard $100,000 mortgage, you would’ve paid: $811 a month,...

More Zigs & Zags to Come

—The Mortgage Report: Weekend Edition— Canada’s rate outlook got a boost this week from two influential developments: Promising vaccine news (20 potential vaccines are in late-stage trials, including Pfizer’s drug that’s reportedly over 90% effective), and The widespread acceptance of Joe Biden’s presidential victory. This much-needed dose of good news led investors to sell government bonds, which is typical when...

BoC Decision: More Impact on 5-year Rates Than Prime Rate

Quick Rundown Today’s Announcement:No change to rates Overnight rate:0.25% Prime Rate:2.45% (also no change; seePrime Rate) Market Rate Forecast:No BoC hikes until at least 2023 BoC’s Headline Quote: “The Governing Council will hold the policy interest rate at the effective lower bound until economic slack is absorbed so that the 2% inflation target is sustainably achieved. In our current projection,...

Record-Low Fixed Rates May Depend on the BoC

—The Mortgage Report: Oct. 21— Canada’s budget deficit will end 2020 “near 20% of GDP,” according to the IMF. “That represents the fourth-highest projected deficit in the world, after Libya, Aruba and the Maldives,” says Bloomberg News. With that degree of fiscal hemorrhaging in Ottawa, bond yields (and hence fixed mortgage rates) would jump sooner were it not for Bank...

The Chance of Negative Rates Remains

“We are not actively discussing negative interest rates at this point, but it’s in our toolkit and never say never.” Bank of Canada Governor, Tiff Macklem That comment from Canada’s monetary kahuna, Tiff Macklem, put a glimmer of hope in the eyes of variable-rate mortgagors this week. By leaving the door open to sub-zero rates, even if just a crack,...

The Bank of Canada Controls Your Mortgage Rate

Bond yields heavily influence what people pay for a mortgage. In general, the more government bond-buying there is, the lower fixed mortgage rates go. Explainer: Bond prices and bond rates (yields) always move inversely. Fixed mortgage rates are benchmarked against bond yields. Governments around the world are manipulating mortgage rates by buying their nations’ own debt. Take the U.S. Federal...

Finally, a Major Bank Openly Promotes a Sub-2% Five-year Fixed

—The Mortgage Report: Sept. 10— CIBC has dropped the following special fixed rates: 5yr (high-ratio): 2.07% to 1.97% 5yr (uninsured): 2.24% to 2.14% 7yr: 2.71% to 2.61% It’s the first time ever that a Big 6 Canadian bank has widely and openly advertised a 5-year fixed rate under 2%, albeit it’s only on default-insured mortgages. This development is more symbolic...

Bank of Canada Re-Signals a Long Road to Recovery

Quick Rundown Today’s Announcement:No change to rates Overnight rate:0.25% Prime Rate:2.45% (also no change; seePrime Rate) Market Rate Forecast:No BoC hikes until at least 2023 BoC’s Headline Quote: “The Governing Council will hold the policy interest rate at the effective lower bound [intended to be 0.25%] until economic slack is absorbed so that the 2% inflation target is sustainably achieved.”...

Looking for Better 5-year Fixed Rates? The BoC’s Got You Covered

—The Mortgage Report: July 31— Snapping Up Bonds: Fixed-rate mortgage shoppers dreaming of lower rates better hope for lots of bond buying in the months to come. And that’s what we’re getting from the Bank of Canada. The BoC is buying a lot of 5-year bonds, which heavily influence 5-year fixed mortgage pricing. Under the Government of Canada Bond Purchase Program...