Last Wednesday the Bank of Canada announced an increase in their overnight lending rate by .25% taking it from .50% to .75%. This is the first increase in the past 7 years. The rationale here was that economic growth projections are higher than previous ones and this was a way to temper inflation.
The banks were quick to jump on the bandwagon and have increased their prime lending rates by the same amount – to 2.95% from 2.70%. It is interesting to note that while increases seem to flow through to the banks instantly, the two last previous changes to the Bank of Canada rate (reductions of .25% each time) were met with not only a delay in the banks reacting, but also a smaller reduction in prime (they reduced prime by .15% each time). This phenomenon is good for shareholders and executive bonuses but not so good for borrowers.
0 Comments
With the Bank of Canada hinting strongly at moving up the interest rate, most likely by .25%, we will see an increase in the prime rate most likely to 2.95%. If you have an adjustable rate mortgage then you will see your monthly payment increase to match this new rate.
|
Hey There!Please Feel Free to Leave a Comment on my Blog Post! Categories
All
Archives
February 2019
Categories
All
|