Bank of Canada Overnight Rate and Lines of Credit Regulations Changing Soon
Hope you all had a wonderful summer! Here is your personal update from me on the recent Bank of Canada Overnight Rate announcement
At 9:00 am EST, Wednesday September 5th, 2012, the Bank of Canada again did what we expected them to do… they maintained their overnight rate. What this means to you is that the prime rate on variable mortgages or line of credit will not change and remains at 3.00%.
The overall economic growth in Canada is expected to pick up through 2013 and there are tentative signs of slowing in household spending which the Bank is in favour of. Based on this outlook, they have indicated they are unlikely to increase their rate in the foreseeable future although very much dependent on the continued trend. A change is likely to occur in 2013, and it is expected to be gradual and controlled in line with economic recovery, both in Canada and globally.
Fixed rates haven’t changed much either since the last announcement, maintaining at around 3.19% to 3.39% for a five year fixed term. Dreyer Group does have access to a 5 year fixed at 2.99% - so while variable rates are very low, many clients are choosing to lock in at this historically low fixed rate. If having a fixed payment is important to you, call my office so we can calculate what your new payment would look like and also if it is suitable for you. The next announcement on any change to the prime rate is October 23, 2012.
Here is an excerpt of the announcement from the Bank of Canada and what they had to say about their decision:
“The economic expansion in the United States continues at a gradual pace. Europe is in recession and its crisis, while contained, remains acute. In China and other major emerging economies, growth is decelerating somewhat more quickly than expected from previously-rapid rates, reflecting past policy tightening, weaker external demand, and the challenges of rebalancing towards domestic sources of growth. Notwithstanding the slower global momentum, prices for oil and other commodities produced by Canada have, on average, increased since July. In Canada, while global headwinds continue to restrain economic activity, underlying momentum remains at a pace roughly in line with the economy’s production potential.”
Lines of Credit Limits Changing Soon
On a side note, there are some mortgage legislation changes coming into effect in the fall which impact secured lines of credit. They will be limited to a maximum of 65% of the value of your property which is lower than the current maximum of 80%. Therefore if you are thinking of taking out some equity in your home and a line of credit is something you are considering, call me now so we can chat before the changes come into place and your options may diminish.
Help Us Help Your Colleagues, Family and Friends
I wonder if I can ask a favour – rates are still so low right now and so it is a great time for first time homebuyers, buying an investment property or consider refinancing especially as I can hold rates for up to six months, if you know of someone that is looking for advice on their mortgage options, with no obligation, would you mind passing my contact information on to them – this is very much appreciated. We build our business from introduction from great clients like you!
Your Mortgage Professional
About Dreyer Group Smiles
Dreyer Group Smiles is a program dedicated to giving to facilities that provide safe and transitional housing to children and youth in the Fraser Valley of British Columbia. By providing funds to these programs, Dreyer Group will make a meaningful difference to kids who otherwise may not have a roof over their heads, or hope for a bright future.
Dreyer Group hopes to expand this effort through their clients and business partners. In addition, they plan to raise additional funds through annual events and corporate fundraising initiatives. Dreyer Group is working closely with the Salvation Army to allocate these funds to the children and shelters.
About Dreyer Group Mortgages, A Member of the VERICO Brokers Network
As a senior mortgage consulting team with extensive experience in the financial services industry and thousands of happy clients throughout the Lower Mainland, we understand what it takes to build long-term relationships through service and expertise. As an independent brokerage, we are not restricted to one financial institutions mortgage options. We provide the best range of financing solutions by accessing over 40 lenders and hundreds of products coast-to-coast.
Each VERICO member is an independently owned and operated business.
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