As expected, on March 5, 2014
, the BANK OF CANADA
announced that it was maintaining its target for the overnight rate at one per cent. The Bank Rate is correspondingly one and a quarter per cent and the deposit rate are three quarters of a per cent.
The fundamental drivers of growth and inflation in Canada continue to strengthen gradually, as anticipated. With inflation expected to be well below target for some time, the downside risks to inflation remain important. At the same time, the risks associated with elevated household imbalances have not materially changed. The Bank judges that the balance of risks remains within the zone for which the current stance of monetary policy is appropriate and therefore has decided to maintain the target for the overnight rate at 1 per cent. The timing and direction of the next change to the policy rate will depend on how new information influences this balance of risks.
The financial institutions will also keep their Prime Lending rate at 3%. With falling bond yields some of the financial institutions lowered their fixed rates and a 5 year fixed term is now around 3.29%; whereas variable rates continue to remain steady with 5 year discounted variable rates at Prime -.50%.
The next Bank of Canada Rate Announcement will be on, April 16, 2014.
To discuss your personal situation, contact one of our Mortgage Agents
Banks show restraint on mortgage rates one year after Flaherty's warningMarch 3, 2014
A year after being admonished for cutting mortgage rates too aggressively, banks are demonstrating a new, self-imposed restraint.
In March, 2013, Bank of Montreal dropped its five-year mortgage rate to 2.99 per cent, spurring Manulife Bank to follow suit as the all-important spring housing season kicked off.
Enraged because he had been trying to slow the market, Finance Minister Jim Flaherty intervened, criticizing lenders who slashed rates and publicly praising those who held pat. It was the second year in a row that a mortgage-rate war kicked off as spring approached.
This year, there is little evidence of a similar battle for market share. Mortgage rates typically follow five-year bond rates, but while bond yields are falling, banks are demonstrating little eagerness to engage in a race to the bottom for mortgage customers.
While some lenders are cutting rates, the big banks are staying well above the 3-per-cent threshold that triggered Mr. Flaherty’s ire. The lowest five-year fixed mortgage rate offered by a Canadian bank is now 3.49 per cent.
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Globe & Mail
CMHC’s move to hike mortgage insurance premiums prompts competitors to followFebruary 28, 2014
The cost of mortgage default insurance is about to go up for most consumers after competitors moved quickly to follow Canada Mortgage and Housing Corp.’s decision to raise premiums.
The federal agency announced Friday it is increasing premiums across the board, effective May 1. The change does not impact existing homeowners and is expected to raise up to $175-million for CMHC.
“The higher premiums reflect CMHC’s higher capital targets,” said Steven Mennill, CMHC’s vice-president of insurance operations, in a release. “CMHC’s capital holdings reduce Canadian taxpayers’ exposure to the housing market and contribute to the long term stability of the financial system.”
CMHC said in a conference call with journalists to discuss the premium change that it should cost the average Canadian about $5 per month on their mortgage.
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