So… Christmas Parties have already gotten the best of me and I missed sending this out on Friday.
As you know Prime went up by 0.50% last week.
Here is the info we sent to clients who are currently in a variable rate mortgage.
The Bank of Canada raised their key interest rate by .50%.
The Bank of Canada has raised their key interest rate by 0.50%, now at 4.25%. This is the first time the Banks rate has hit or surpassed 4% since 2008. This is the 7th consecutive rate jump, and although this move was anticipated, it was uncertain if it would increase by a quarter or half point. With inflation dropping to 6.9% in October, and core inflation still being around 5%, the move to an oversize half a point suggests that this increase is perhaps an attempt to be the last.
The Banks Statement.
The Banks full statement is linked below but there is definitely a new tone compared to previous statements. Looking ahead, the Bank expressed it "will be considering whether the policy interest rate needs to rise further to bring supply and demand back into balance and return inflation to target". This is very different from recent months where the Banks language indicated that further rate jumps would occur if economic indicators warranted. In recent months, economists projected the Banks rate would end up between 3.75% and 4.25%. Which has been expressed as an "overshoot" in attempt to push us into a "soft" recession. Now that we have hit the highest of the previous projections, markets are anticipating that the Banks rate may sit here through out most or all of 2023.
What does this mean for Prime Rate.
Prime rate will increase to 6.45% with most banks following this increase.
What to do.
While there is no crystal ball to know for certain, all current indicators are pointing to an unlikely need for further increases. Although inflation is still to high and the Banks efforts are to prevent these levels of inflation to become entrenched, inflation is starting to slow. IF you do decide to lock your mortgage in, please email me your new mortgage info so that I can make the proper changes to your file.
The next scheduled BOC meetings for 2023 are: January 25, March 8, April 12, June 7, July 12, September 6, October 25, December 6
Best Regards,
Danielle Franke, Mortgage Broker /Owner, Mortgage Sisters West
780-237-1730 #201, 6650 177 Street NW, Edmonton Alberta T5T 4J5 www.mortgagesisterswest.ca
