As was widely expected the Bank of Canada announced that they would keep the prime rate unchanged this morning. In the BoC’s press release which you can read here, the bank observed that the global economy has slowed significantly. The mood of households much like banks and business is to avoid risk and there is a conscious effort to avoid debt. The final interest rate announcement for 2011 is scheduled for December 6th.
What Does This Mean To You?
The retail bank prime rate remains at 3.00% so if you are in a variable rate mortgage or line of credit your payments will not change. Given the economic uncertainty it doesn’t appear that interest rates will be increasing significantly in the months to comes so if you are in a variable rate mortgage there is no need to lock in.
Good Time To Refinance
Given the low interest rate environment the coming months present a good opportunity to refinance your mortgage. Fixed rate mortgages are priced around 3.39%. You may want to consider a refinance if:
- you have a fixed rate mortgage above 5%
- your consumer debt (credit cards, lines of credit, etc) are becoming unmanageable
- you are considering a large rennovation
- you want to tap into your equity for a large expense or purchase of an investment
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