June 2021 Bank of Canada Interest Rate Update

June 9, 2021

Key points from the Bank of Canada June 2021 announcement:

  • The Bank of Canada has announced they will hold the overnight lending rate at 0.25%. This means there will be no changes to the retail prime rate of 2.45% (2.60% TD).
  • The BoC remains committed to supporting the Canadian economy via a low interest rate policy to help rebound out of the pandemic lows.
  • The BoC still projects that in late 2022 they will likely need to start increasing rates, as they will reach their 2.00% core inflation rate target.

 

 

No change to the Bank of Canada policy rate.

The BoC made their June 2021 policy rate announcement this morning, keeping the rate unchanged at 0.25%.

The announcement widely met expectations.

Optimism was toned down in today’s press release when compared to the April meeting. The long third-wave lockdowns and uneven economic growth in the second quarter are considerations as the economy rebuilds. 

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

While the Bank of Canada has acknowledged that we are trending in the right direction, they remain committed to supporting a fragile recovery. 

What does this mean for you?

Today’s decision means that the retail prime rate will remain at 2.45% (2.60% TD Bank). You can expect no changes to the monthly interest charges on your variable rate mortgages and lines of credit. 

The BoC hasn’t changed their projection that late 2022 might be when they’ll start to increase rates. This remains speculative and there are a number of factors that will play into this decision over the next 12 to 18 months. 

The decision between fixed vs. variable rates should be considered, but at the moment there remains no strong incentive to convert a variable rate into a fixed rate. 

NOTE: if you are currently in a variable rate with a discount of minus .60 or less, it is worthwhile considering a refi to a lower rate

If you’d like to discuss specifically how the current rate environment impacts your mortgage, you can book an appointment with me here.

For more information about mortgage financing and to discuss any specific requests please book a call directly into my calendar here below.


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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.