Variable Mortgage Rate, Prime Rate, Unchanged
Variable Mortgage Rate, Prime Rate, Unchanged
The Bank of Canada announced this morning that it has left the target for the overnight rate unchanged from its current level. This means that banks will most likely also leave their prime rate at its current level of 2.25%. Further to this the Bank of Canada re-confirmed its conditional commitment to hold this rate until the end of the second quarter of 2010.
This is likely good news for those on or currently considering a variable rate mortgage in Vancouver BC as it gives some comfort to how long into the future rates can remain at current levels. We also know that once the prime rate starts to increase it will take some time to get to where current fixed mortgages rates are, if they even reach this point. So, savings will continue even after the prime rates starts to rise, but will decrease over time. Past this point it is too hard to say what will happen in terms of the prime rate as it could plateau at a certain level, increase a bit further, or come back down a bit. This is the inherent uncertainty with a variable rate mortgage, however, we know from historical data that if comfortable with this type of mortgage people have saved over time as compared to fixed rate mortgages.
Having said this, fixed rate mortgages are still available at extremely low levels and can be hard to resist for the certainty they provided over the next three to five years.
For more information on variable rate mortgages and fixed rate mortgages in Vancouver, BC, please contact me to discuss which may be best suited to your situation, future plans, and current needs.
The next meeting for the overnight rate target is on December 8, 2009.
(604) 603-2520 | Maury@MauryLum.com | www.MauryLum.com |
