“The Bank’s policy action is intended to provide insurance against these risks, support the sectoral adjustment needed to strengthen investment and growth, and bring the Canadian economy back to full capacity and inflation to target.” Poloz Quote
We are seeing 2015 move very quickly this year in a lot of different directions. All commodities are taking a sharp turn downward in pricing, with Oil leading the way. The Bank of Canada is taking a proactive approach to the potential risks for the overall Canadian economy by reducing the key rate to.75%. We do hope that the banks do follow and help the economy by reducing the prime rate from 3.00% to 2.75%. The last time the Bank of Canada did cut the rate, the banks did not pass the savings on to the consumer. We will keep a close eye on the movements today from the banks.
The 5 year fixed bond rate( which determines the 5 year fixed mortgage rates) has dropped below 1.00%. This means fixed rate could potential come down even lower than the record lows that we currently have. I expect the lenders to be offering very attractive Variable and 5 Fixed rates for the upcoming spring market. Right now the lenders are making a lot of profit on the interest rate spreads based on todays borrowing costs. Please keep in mind as you read through the headlines of the press, Canada is a very diverse country, each province and even regions within the provinces have their own economies. BC and Ontario will fair very different than Alberta, Saskatchewan for 2015. We will continue to monitor activities and keep you informed.
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