Bank of Canada & Market Update

The More Things Change…...the more they stay the same. Bank of Canada Governor Stephen Poloz announced yesterday that the Prime Lending rate would stay put. Canada has held steady at 1.75% for 16 months now. And though the announcement was not a surprise, what's interesting is the change in language used by our Central Bank.

The last quarter of 2019 saw slower growth than what was expected which looks to be carrying over into 2020. And where Canadians had been given assurance that the current Prime rate was appropriate, that assurance was notably absent in yesterday's Monetary Policy Report. All of this likely sets the stage for a drop in Prime over the course of 2020.

So what does this mean for consumers? If you're in a variable rate mortgage, loan or line of credit, nothing will change for you. Your rate and payment stay the same. For fixed rate borrowers, your contract rate will be locked in for your term so you too will not see any changes. And though the Prime Lending Rate doesn't directly impact fixed rates, the language and outlook has some influence there. The weaker economic outlook from yesterday's report caused Bond Yields, which influence fixed rates, to drop. All that to say, it's likely we see fixed rates start to drop a little bit - at least in the near term.

Overall, rates are still near historic lows for Canadian borrowers. If you would like to review your current mortgage and financial situation, I'd be happy to see if we can save you some money on interest or free up some cash flow for you and take some of the monthly billing stress off your mind.

As always, if you found this information helpful or want to connect to talk about anything that's happening in the market, I'd love to hear from you!