Bank of Canada Drops their benchmark lending.50%.
Surrey, BC - Jan. 20, 2009 - The Bank of Canada has dropped it's key lending rate by .50% with the Big Banks following along and dropping their prime rates to 3.00%. Some predict another .50% drop in March. With these drops there is some pressure on the lenders to increase their spreads between the rate they pay for deposits and the rate they make on variable rate mortgages, if you or someone you know are thinking of making a change either to your existing mortgage or buying a new home, it is important to get the product locked in with the current rates.
Bond yields are at historic lows as well, though lenders have been slow to lower their fixed rates due to the much higher cost of borrowing than in the past. Current discounted 5 year fixed rates now hover in the 5.00% range.
If you are currently in a variable rate mortgage, we recommend staying there if possible. Today's current variable rate mortgage products do not have discounts in Prime, rather they have a small premium over Prime with some at Prime +.80% or Prime +1.00% (which now = 3.80% - 4.00%). With falling fixed rates now is not the time to lock in your variable rate, we see at least 6 months of low rates or more before there will be any upward pressure on rates. If you are in a fixed rate mortgage above 5.00% we need to review your situation.
As always, having a Mortgage Strategy in place is always the best plan!
Call us for a no obligation review at anytime.
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