What's been happening with all the talk around interest rates?
Many consumers become confused with the words Bank of Canada dropped their key lending rate, and the banks are changing their rates. What is all this about? Well, here is a summary of what has occurred over the last couple of weeks.
On January 21, 2015 Bank of Canada announced it was lowering it's key lending rate by 0.25% bringing it to a record low 0.75%!! What we typically see is within a few days after an announcement like that from Bank of Canada the banking institutions also decrease their own Bank Prime Rates matching the decrease from Bank of Canada. It took a few days and many were left wondering when and if we would see the banks match the rate drop.
Finally, last week on January 26th we saw one by one, banks lowering their Prime rates but by 0.15%, not the full 0.25%. This took most of the banks Prime rates from 3.00% to 2.85%.
For all you variable rate holders, you should be receiving notification in the mail from your lenders that your rate will be decreasing shortly. Each lender operates a bit differently but they will notify you of the date of the change and if your payment is changing.
For lenders that don't change the payment, keeping them the same in a rate dropping environment works in your favor as more of your payment will go to principal. For anyone with a lender that changes your payment I would highly suggest contacting me and request keeping the payment the same so that you can take full benefit of this rate drop.
What about fixed rates? We have seen many drops in fixed rates too. If you've got a variable rate mortgage, need a new mortgage, are renewing, or want to consolidate debt at the lowest cost, this is great news!