BoC leaves overnight rate at 1% today.

By
Mortgage and Lending with Verico Canada First Mortgage
http://actvra.in/5P

The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent.

The global economic recovery is proceeding largely as expected, although risks have increased. As anticipated, private domestic demand in the United States is picking up slowly, while growth in emerging-market economies has begun to ease to a more sustainable, but still robust, pace. In Europe, recent data have been consistent with a modest recovery. At the same time, there is an increased risk that sovereign debt concerns in several countries could trigger renewed strains in global financial markets.

The recovery in Canada is proceeding at a moderate pace, although economic activity in the second half of 2010 appears slightly weaker than the Bank projected in its October Monetary Policy Report. In the third quarter, household spending was stronger than the Bank had anticipated and growth in business investment was robust. However, net exports were weaker than projected and continued to exert a significant drag on growth. This underlines a previously-identified risk that a combination of disappointing productivity performance and persistent strength in the Canadian dollar could dampen the expected recovery of net exports.

Inflation dynamics in Canada have been broadly in line with the Bank's expectations and the underlying pressures affecting prices remain largely unchanged.

Reflecting all of these factors, the Bank has decided to maintain the target for the overnight rate at 1 per cent. This leaves considerable monetary stimulus in place, consistent with achieving the 2 per cent inflation target in an environment of significant excess supply in Canada. Any further reduction in monetary policy stimulus would need to be carefully considered.

How does this affect mortgage rates? It only affects variable rates and home equity line of credits as these rates are based on the prime rate. These rates fluctuate as the prime rate goes up or down.

Fixed rate are more dependent on the bond market. When the margin between bond and fixed rates gets smaller it is usually an indication for fixed mortgage rates to go up.

For any questions feel free to contact me.

Carola Singer

Verico Canada First Mortgage

403.479.1115

www.mortgagebyreferral.ca

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Rainmaker
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Ted Tyrrell
DFH Real Estate Ltd. - Victoria, BC
Selling Homes in Beautiful Victoria

Carola, looks like Canada Prime Rate will not move until late spring 2011.

Jan 16, 2011 02:04 AM #1
Rainer
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Carola Singer
Verico Canada First Mortgage - Okotoks, AB

Yes Ted. Now we just have to work with the new mortgage rules, make sure people won't panic and there won't be a bunch of fear mungering.

Jan 17, 2011 12:32 PM #2
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Rainer
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Carola Singer

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