The mortgage industry was watching this morning’s scheduled interest rate announcement from the Bank of Canada very closely. Economists were split as to whether we would see a cut, or whether the overnight rate would be maintained. In the last couple of weeks leading up to the announcement, it was looking more and more likely that the Bank would leave the rate unchanged, which is exactly what happened. Many were expecting a cut, however, it should not come as a huge surprise that the Bank of Canada has left their overnight rate unchanged. (Prime rate is based on the overnight rate).
The Bank of Canada is doing everything they can to avoid a rate cut and will hold out as long as possible. There have been over 30 central banks around the world who have already decreased their rate, but the Bank of Canada remains reluctant to join this list.
The Bank of Canada can only hold off on cutting its rate for so long. While our economy was stronger than expected last quarter, the remainder of the year is not optimistic. Trade wars continue to affect the global economy, and it’s not looking like this is going to change anytime soon. Chances remain strong that we will see a cut before the end of this year, but as always, time will tell.
There are currently 5 year fixed rates as low as 2.39% for high ratio (CMHC insured) mortgages, or for those with 35% or greater down payment/equity. The purchase price must be under $1 million OR the home needed to have bee purchased prior to November 30, 2016, to be eligible.
You can read about the announcement here.
The next scheduled interest rate announcement from the Bank of Canada will be on Oct 30, 2019.
*Rates vary based on down payment/equity percentage, property value, etc. Please get in touch with me to find out the lowest rate available for your situation.