The Bank of Canada announced this morning that there would be no change in their overnight lending rate. As a result all major banks will leave their prime lending rate at 3% and in turn your variable mortgage rate will remain unchanged as well. The Canadian economy is performing as the Bank of Canada expected. However, the strength in the Canadian dollar is hurting our manufacturing and export sector (good news for variable rate mortgage holders). This will help the Real Estate market remain strong by not reducing buying power in addition to the new mortgage rules coming into effect soon. In addition, inflation remains in line with the bank’s expectations. Geopolitical issues (see Libya) has also pushed commodity prices up-wards, adding further strength to the dollar. In short, as per my previous update, I do not see the Bank of Canada increasing rates before this summer. If and when they do move they will have to do so cautiously (.25% at a time). My next update will follow after the Bank of Canada’s next rate announcement on April 13th.
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