The Bank of Canada has announced it is maintaining its target for the overnight rate at 1.75%.
What matters more to you however, is that the Prime Interest Rate, the annual interest rate major banks use to set interest rates for variable loans and lines of credit is currently at 3.95%, and is also expected to remain stable. That said, even though the current Prime Rate is 3.95%, heavy competition has seen many lenders offer much lower mortgage rates.
The Royal Bank of Canada, Bank of Montreal, CIBC and TD Canada Trust raised their prime rates by a matching quarter of a percentage point in the wake of the central bank decision in October of last year, when the overnight rate went from 1.5 to 1.75%.
The past two years had seen a steady increase after a stable low Prime Interest Rate of just 2.70% in July 2015, up to 3.95% in October 2018. Since then, the rate has been unchanged, as the Bank of Canada has held the overnight rate steady.
This cautious approach to rates comes as global trade tensions put a damper on the economy.
In addition to home loans and lines of credit affected by changes in the prime rate, other types of borrowing, from personal loans to car loans to agricultural and small business loans can also be impacted by rate increases, making this current stability good news for all borrowers.
Even as the overnight rate remains the same, strong competition is forcing lenders to eat in to their traditional margins. That mean lenders are currently offering highly competitive five-year, fixed-rate products, making now an excellent time to look at renewing your mortgage as your chances of finding a lower interest rate are reasonably high.