Variable Mortgage Rates Staying Low???
Is the Bank of Canada going to announce a rate hike on Thursday? Most analyst agree that the BOC will hold the prime lending rate steady at its current level. In the past the Bank of Canada has promised to keep the rate at .25% until June of 2010. This means if you have a variable rate mortgage you will be enjoying these record low rates for another 10 months.
However, analysts also agree that if the Canadian dollar keeps climbing the bank might need to take action to keep the dollar in check. As we recover from the recession the last thing we need is to have our exports decline because our dollar increases in value making our goods less affordable to other nations. One way to control the value of the dollar is to raise interest rates.
That being said, Canada’s economic performance is growing in line with the Bank of Canada’s forecast so they will probably not move the interest rate.
So is now a good time to get a variable rate mortgage? The answer is maybe. As I mentioned in another post, the premium added to the current prime rate has fallen, but still exists. It is predicted variable rates will be at prime or slightly below in the next 6 months so you may want to take a shorter term fixed mortgage and wait for that premium to disappear before committing to a variable rate mortgage.
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