Skip to main content

BOC and posted rates.......

The Bank of Canada held the line today and left the country’s pace-setting overnight rate at 1%.
The news, however, is not what the BoC did, but what it hinted at doing.
Governor Mark Carney and co. jostled expectations in their prepared statement, which said:
  • Bank-of-Canada“Overall, economic momentum in Canada is slightly firmer than the Bank had expected in January.”
  • “…The economy is now expected to return to full capacity in the first half of 2013.”
  • “…The profile for inflation is expected to be somewhat firmer than anticipated.”
  • “Europe is expected to emerge slowly from recession in the second half of 2012”
  • “In light of the reduced slack in the economy and firmer underlying inflation, some modest withdrawal of the present considerable monetary policy stimulus may become appropriate.”
This last point, in particular, has put the bond market on edge. As of this writing, 5-year yields are up seven basis points since this news broke, and up 10 bps on the day. (Bond yields lead fixed mortgage rates.)
Prior to this morning’s announcement, the market expected the Bank of Canada to move rates in early 2013. We could now start seeing some economists shift rate hike predictions to Q4 of this year. BMO has already moved up its forecast by six months to year-end 2012, according to BNN.
The BoC will still want to see more data before pulling the trigger, however. Canada remains tightly constrained by cautious U.S. growth, and that growth has had a funny habit of disappointing after optimistic spurts in the spring.
We also have the same contingent of Eurozone countries still battling ongoing solvency fears.
Pending the next few months of domestic data, the storylines in the U.S. and Europe have the potential to continue weighing down Canadian rates.
For now, today’s BoC decision to leave the overnight rate at 1% means that prime rate should remain at 3.00%.
The next Bank of Canada rate meeting is June 5.

Popular posts from this blog

Budget 2025 & the Alberta Mortgage Market: What Buyers and Homeowners Need to Know

  The federal government has released its 2025 budget, and while the focus is largely on long-term housing supply, there are several key items that matter for buyers, homeowners, and investors in the Edmonton-area markets — including Spruce Grove, Stony Plain, St. Albert, Leduc, Beaumont, and Sherwood Park . Below is a clear, Alberta-specific breakdown of what changed, what didn’t, and how this affects mortgage decisions over the coming year. 1. The Rate Environment: What It Means in Alberta The Bank of Canada recently reduced its policy rate to 2.25% , bringing mortgage prime down to 4.45% . This matters for our markets because: Variable-rate mortgages are becoming competitive again. Payment shock for renewals may ease slightly. But—and this is key— we do not expect dramatic further rate drops due to ongoing inflation pressures. Bottom line: Alberta borrowers now have more flexibility. Variable may start to make sense again, but choosing between fixed and variable...

New and Improved Website Coming Soon... and some updates! :)

I am so happy to announce that I will be having a new website I am designing! What a learning curve I can tell you - I had someone plug in the theme to use and help with some charts and pictures but I am happy to say I have been the one to put it mostly together! I think however I will stick to Mortgage Building vs Web Building! lol, I am way better at the former than the latter that is true. Speaking of mortgages, as you already know the Bank of Canada has already left the overnight rate as is... so what does that mean for you? The lenders are still offering stable rates with nothing really going up to high or down to low... rates have been pretty consistant. The thing that has not remained steady are mortgage products. Most lenders have now all followed suit in regards to using a 3% payment caculation on all unsecured lines of credit and credit cards vs using the provable payment. This makes things I find tight for First Time Buyers when looking at what they qualify for. For exampl...

The Tricky Thing About Rates, When Your Under 80% Loan to Value....

I will dive right in. The rate market is a tricky thing currently for most regular people to understand. They see rates posted online that seem amazing, do their applications and then find out the rate changed somewhere in the process and not for the better. Response, anger - usually at the broker or banker they were dealing. So let me try to break this down a little so that it may begin to make more sense. Since the newest Government changes we have the Stress Test, this one everyone know, except not everyone knows what it means. In a nut shell, any insured mortgage needs to qualify at the Bank of Canada Rate (5.34% as of April 23, 2019) regardless of the actual paid rate on the mortgage. Now here is some information most people do not know, so buckle up as this road gets a bit bumpier. Rates change based insured, insurable or uninsured and then again for insurable your loan to value comes into play for the rate as well. Insured means, CMHC or GE insurance premiums are include...