HOLDING STEADY AT 1%: BANK OF CANADA
There’s good news for the real estate market in Collingwood, Blue Mountains, Clearview, Wasaga Beach, Meaford, and all of Canada this morning. The Bank of Canada has once again held it’s key overnight rate at 1%.
Changes to the overnight rate sends a signal to banks about which direction the Bank of Canada wishes to see short-term interest rates go. This usually leads to movement by commercial banks’ prime rates and can also affect lending rates for loans and mortgages in non-commercial banks as well as the interest rates paid on deposits, savings or GICs. When interest rates are lower, people spend and borrow more money. This affects the economy in a positive way. If, however, the economy grows too fast, this can lead to inflation. In that case, we will see the Bank of Canada raise the rate, in order to slow down spending and borrowing, curbing inflation. According to their website, “The Bank of Canada sets the target for the overnight rate at a level that will keep inflation low, stable, and predictable over the medium term. Low and stable inflation provides a favourable climate for sustainable growth in output, employment, and incomes.”
As an aside, please check out the historically low, low interest rates currently being offered at most financial institutions right now, especially if you’ve been considering locking in your variable rate mortgage! Bank of Montreal made a BIG splash this week with their ultra-low 2.99% 5 year term (no-frills) mortgage. Other banks answered back with their own incredible deals, so be sure to check with your lender if it’s time to lock in or renew.