Categories for Bank of Canada

Prime Rate Jumps: What You Need to Know

In just the latest reminder that banks value profit above PR, each of the Big 5 have hiked prime rate by a full 1/4 point. That means the rate variable mortgages are based on rises to 2.95% on Thursday, at most big lenders. Some had speculated (hoped) that banks would lift prime just 15 bps to match their last stingy cut in 2015. But this was a “prime” opportunity for...

BoC Hikes: Mortgage Rate Surveillance

A quick briefing on recent mortgage rate developments: Higher Rates on the Radar: The market has now fully priced in a rate hike this year, based on the yields of interest rate derivatives. “Clearly this is no longer an economy that requires emergency-level interest rates,” says TD. Both it and CIBC predict the first 25 bps rate bump in October. But some analysts think...

Rate Inertia Persists (For Now)

Variable-rate holders can sit back in their easy-chair. Prime rate is cemented at 2.70% after the Bank of Canada pushed out its forecasted economic recovery for the umpteenth time. The Bank said there’s now “heightened uncertainty” in its rate outlook, as if it had any certainty before. It nevertheless has consulted its black box models, which purblindly forecast 2% growth through 2018. Two percent growth...

Thank You, Mr. Poloz?

“Young folks with mortgages regularly thank me for keeping interest rates low.“ —Bank of Canada Governor, Stephen Poloz In fact, Mr. Poloz’s decisions to keep rates low have practically been made for him, by serially disappointing economic data. Monetary policy has merely reacted to what he terms “a steady decline in the potential growth rate of the economy.” The...

Prime Rate, Going Nowhere

Another Bank of Canada rate meeting has come and gone with no shift in prime rate. Here’s pretty much the only line in the Bank’s 421-word statement worth repeating: “On balance, risks to the profile for inflation have tilted somewhat to the downside…” Deciphered, this means: The Bank is closer to dropping rates than raising them. And it could take multiple...

The Economic Ice Age & Mortgage Rates

Yesterday’s Bank of Canada Decision: Roses in a Weed-patch You’ve got to hand it to Bank of Canada head Stephen Poloz. He’s remained as optimistic as a dog before dinner. The problem is, the BoC’s undying economic optimism doesn’t jibe with its repeated cuts to Canada’s growth outlook. The BoC wants to stay positive because negativity doesn’t help recoveries. It wants us...

Rate Surveillance: Another BoC Non-Event

An Idle Bank of Canada If you forgot about the Bank of Canada rate meeting yesterday, you’re one of many. Nobody made a big deal about it because nobody expected anything earth shattering from Poloz’s lips. The takeaway is that prime rate remains stuck at 2.70% and it could stay that way for months. The Bank did lift its Canadian growth estimate,...

The BoC & Mortgage Rates

No rate-cut drama today. The Bank of Canada left its key lending rate at 0.50% this morning, a move expected by about half the market. Mortgage Impact: Banks weren’t about to cut prime by more than 5-15 basis points anyway (a basis point is 1/100th of a per cent), so this news is not overly momentous for variable-rate mortgage holders—not in the near-term...

The Bank of Canada Countdown

A feeling or state of nervousness or excitement caused by wondering what will happen. That’s the definition of suspense. And that’s what the financial community is feeling right now about Wednesday’s Bank of Canada rate meeting. Will “The Poloz” chop the overnight rate in half, from 0.50% to 0.25%? Or will he stick in “wait and see” mode, and hope the devalued loonie...

BoC Qualifying Rate Hits Record Low

This week the Bank of Canada’s “benchmark rate,” a measure of 5-year posted mortgage rates, dropped to an all-time low of 4.99% (from 5.24%). The benchmark rate is an important number used by lenders to qualify you for a mortgage (i.e., calculate how big of a mortgage you can afford). It’s also used as the basis for: •   Cashback mortgage rates •   Rate guarantees –...