Following the Bank of Canada overnight rate drop last week, many mortgage lenders have chosen to drop their prime lending rate by .15 % from 3% to 2.85%
This is good news for variable rate mortgage holders who’s lenders have followed the drop in prime rate.
For those of you interested in fixed rate mortgages - the 5 year fixed bond rate ( which determines the 5 year fixed mortgage rates) dropped today to a new record low of 0.725%. This means fixed rates could potentially come down even lower than the record lows that we currently have. I expect lenders to be offering very attractive Variable and 5 year Fixed rates for the upcoming spring market. Right now lenders have a very healthy cushion on interest rate spreads, based on todays borrowing costs.
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 did hope that the banks would 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 in 2010, the banks did not pass the savings on to the consumer. This time they have waited and only passed on a .15 bps cut to the current prime rate of 2.85%. I do believe we will need to keep a very close watch on the employment numbers as this will provide some direction as to what direction interest rates could be heading.
For current interest rates, go online to www.dreyergroup.ca or call us at 1-800-687-9020