Variable Rate News

As you know, your variable rate mortgage, lines of credit and/or student loans are all based on the Prime Rate and as promised, here is your personal update from me on the recent Bank of Canada announcement on changes to their Overnight Rate which in most cases impacts your Prime Rate. At 9:00 am EST, Tuesday June 5th, 2012, the Bank of Canada again did what we expected them to do… they maintained their overnight rate.  What this means to you is that the prime rate on your mortgage or line of credit will not change and remains at 3.00%.  This is great news as you still have a great low rate and so continue to make the most of the low payments you will still have and maybe chat with a financial advisor about a Tax Free Savings Account or some RRSP contributions to trigger a potential income tax refund next year!  If you don't have a financial advisor, let me know and I'd be happy to recommend one to you. Here is an excerpt of the announcement from the Bank of Canada and what they had to say about their decision: "The outlook for global economic growth has weakened in recent weeks. Some of the risks around the European crisis are materializing and risks remain skewed to the downside. This is leading to a sharp deterioration in global financial conditions. While the U.S. economy continues to expand at a modest pace, economic activity in emerging-market economies is slowing a bit faster and a bit more broadly than had been expected. More modest global momentum and heightened financial risk aversion have reduced commodity prices." The overall economic momentum in Canada is still sluggish but the Bank expects that growth will slowly continue.  Based on this outlook, they have indicated they are unlikely to increase their rate in the foreseeable future although very much dependent on the continued trend.  A change is likely to occur in 2013, it is expected to be gradual and controlled in line with economic recovery, both in Canada and globally.  Remember any change to the prime rate since 1992 has only been by 0.25% at any ONE time. Fixed rates haven't changed much at all since the last announcement, at around 3.19% to 3.39% for a five year fixed term. Based on this recent announcement, and the anticipation that the prime rate will still remain low for a while now, unless you feel otherwise, I'd recommend that you remain with your current variable rate product as the interest is very much lower than a fixed term rate right now.  However, if having a fixed payment is important to you, call me so I can calculate what your new payment would look like and also if it is suitable for you. The next announcement on any change to the prime rate is July 17^th, 2012 at which time I'll be in touch again. I wonder if I can ask a favour – rates are still so low right now and so it is a great time for first time homebuyers, buying an investment property or consider refinancing especially as I can hold rates for up to six months, if you know of someone that is looking for advice on their mortgage options, with no obligation, would you mind passing my contact information on to them – this is very much appreciated. Yours truly,

Kupina Mortgage Team | info@kmortgage.ca