December 2018 Rate Watch – Bank of Canada Keeps Benchmark Rate Unchanged

December 5, 2018

Bank of Canada maintains the benchmark rate at 1.75 per cent.

The final BoC interest rate meeting for 2018 is in the books. As was widely anticipated in the lead up to today’s meeting the bank opted to hold and not make any changes to the benchmark rate.

While the BoC has communicated the desire to increase the prime rate by another 0.75% – 1.00% to what they call “neutral range” they will have to proceed cautiously.

Since the last meeting in October 2018 there have been some mounting pressures and adverse economic headwinds, namely:

  • The fall in oil prices
  • The closing of the GM plant in Oshawa
  • Downside risks of global trade tensions
  • Signs that rising interest rates and stricter mortgage qualification rules are having a negative effect on real estate prices and consumer confidence.

You can read the Bank of Canada’s entire press release here.

How will this change my interest rates?

Currently the retail bank prime rate is sitting at 3.95%. There will be no changes to your payments if you are in a variable rate mortgage or have a line of credit based on prime.

Is now the time to lock-in?

It’s very difficult in the current environment to generalize any comments about converting a variable rate mortgage to fixed. In order to make a decision you need to consider:

  • The conversion rate being offered to lock-in to a fixed rate
  • The remaining term of your existing mortgage
  • The discount you are receiving off of prime (i.e P minus x)

Not sure?

Let’s set up a time to discuss.

You can book a call time directly into my availability calendar here:

Next meeting is scheduled for January 9th 2019.

As this is the 8th and final Rate Watch email for 2018 I will sign off by wishing you Happy Holidays. I hope that the Holiday season brings you many happy memories and the new year greets you with renewed energy, growth and prosperity.


Christopher Molder

Mortgage Broker

Christopher is a mortgage broker based in Toronto, Canada. And a son of a broker too.He’s a second generation mortgage broker.Following in his father’s steps he joined the family mortgage business straight out of university.