No change to prime rate, but fixed mortgage rates, whoa!

No surprise at all that the The Bank of Canada once again maintains it's overnight rate following their interest rate announcement at 10:00am this morning (Wednesday, September 4th, 2013).  The rate has been unchanged now since September 2010 adding to the longest unchanged streak since the 1950's.   This means the prime rate on your mortgage or line of credit will remain unchanged at 3.00% and your payment will not change.    

Here is an excerpt from the announcement made by the Bank of Canada and what they had to say about their decision:

"The global economy continues to expand broadly as expected, but its dynamic has moderated. In the United States, the process of normalization of long-term interest rates has begun in the context of stronger private domestic demand. Recent data, however, point to slightly less momentum overall than anticipated. In Europe, there are early signs of a recovery, and Japan's situation remains promising. In a number of emerging market economies, financial volatility has increased, adding uncertainty to growth prospects, although China continues to grow at a solid pace."
The past few reports have all talked about growth and continued growth in our economy which is definitely great news as it points toward recovery.  A light at the end of the tunnel!

This decision doesn't affect fixed mortgage rates, which have had significant increases over the past few months.  While variable rate mortgages and lines of credit are affected by prime rate, fixed mortgage rates are determined by bond yields which have been rising precipitously since the beginning of may. This is the reason for the increases.  You can still however you can still get a 5 year fixed mortgage for as low as 3.29% while market rates are between 3.59% - 3.69%. While these rates may even sound high due to where they were over the past year, they are still extremely low by historical standards.  Will fixed rates go higher?  If the bond yields continue to trend upwards, then for sure they will.

We are now starting to see deeper discounts to variable rate causing it to become popular once again.  You can now get a variable rate for as low as prime -0.45%.   It may also be a great time to consolidate any higher interest debt into your mortgage to take advantage of such low rates and lowering your overall monthly payment and amount of interest you are paying significantly.

You can read about the Bank of Canada's decision here:  http://www.bankofcanada.ca/2013/09/publications/press-releases/fad-press-release-2013-09-04/