Tag Archive: Bank of Canada


Bank of Canada Rate Decision: Flat For Longer

Last meeting, the Bank of Canada finally shifted its rate outlook to neutral. After today’s meeting, the gear shifter is still firmly there. Here’s a quick glance at what the BoC did today: Rate Decision: No change Overnight rate: 1.75% Prime Rate: Prime rate remains at 3.95% Market Rate Forecast: Likely one rate cut by the end of 2020 BoC’s Headline Quote: “…the...

HELOC Growth Isn’t What Everyone Thought

It turns out home equity lines of credit (HELOCs) aren’t growing as fast as previous government reports suggest. Prior regulatory filings showed HELOC balances increasingly at roughly double the pace of mortgages. Now, a new report from the Bank of Canada confirms the opposite. “The total balance of HELOCs contracted by 1% year-over-year…” in the fourth quarter of 2018, it...

Poloz Pushes Longer Mortgages

Three-decade-long mortgages are a mainstay in the U.S. mortgage market. But in Canada, 5-year fixed terms dominate the landscape. Forty-five per cent of mortgagors chose them last year, says the Bank of Canada. BoC chief Stephen Poloz wants to see that change. In what he termed a “call to arms,” he challenged the mortgage industry to think outside the five-year fixed....

A Falling Neutral Rate Implies Limited Variable Rate Risk

It’s remarkable how much people focus on the Bank of Canada’s “neutral rate” nowadays. It has become a lighthouse in the rate fog. People rely on it to gauge how far we are from “normal” interest rates. If you’re not familiar with the “neutral rate,” it’s basically the theoretical overnight rate that neither accelerates nor slows the economy and inflation. Last...

Save for 4,635 Days. Beat the Stress Test

Just failed the mortgage stress test and feeling down? Have no fear, a bigger down payment will get you to the mortgage promised land. By putting down more, you’ll lower your debt ratio and be passing the stress test before you know it…as long as you don’t expect a mortgage before 2031. That’s how long stress test flunkies would have...

Bank of Canada Rate Decision: Long Pause

The Bank of Canada’s decision to leave rates alone was far from its most important message today. More on that to follow, but first, here’s a quick take on what the BoC said this morning: Rate Decision: It left Canada’s key interest rate at 1.75% Prime Rate: Prime rate remains at 3.95% Market Rate Forecast: At least one rate cut by...

Canada’s Inverted Yield Curve. What Happens to Mortgage Rates Now?

The Canadian yield curve has officially inverted and that’s bearish for mortgage rates. An “inverted yield curve” (in this context) means that the interest rate on almost every Canadian government bond is now below the Bank of Canada’s 1.75% overnight rate. That’s pretty rare. Why it Matters Inverted yield curves are a danger sign. In a normal economy investors like...

Bank of Canada Rate Decision: Nearing the End

No one thought the Bank of Canada would move rates today. What observers were looking for was a hint that we may be closer to the end of rate hikes than Governor Poloz has been letting on. Here’s what we heard from the BoC on that point, among other things: Rate Decision: Canada’s key interest rate remains at 1.75% Prime...

Analyzing Poloz’s Latest Rate Clues

Bank of Canada Governor Stephen Poloz dropped some notable rate-related nuggets in a speech Thursday. Below we ponder the implications of those comments for mortgagors. Here’s what Poloz said: ****** “Inflation expectations have become firmly anchored on our 2 percent target…My children will never pay anything like the kind of interest rates I have paid in my lifetime.” Translation for...

Mortgage Rates Under 3% Shine…If Neutral is 2%

BMO Capital Markets has taken a “scalpel to [its] Canadian rate forecast,” as it describes it. The company now projects just one Bank of Canada rate increase in all of 2019. By comparison, financial traders peg the odds of a rate hike this year at just 49%. That’s according to implied probabilities in the bond market, as tracked by Reuters. BMO is...