Bank of Canada December Update
As you know, variable rate mortgages, lines of credit and/or student loans are all based on the prime rate and here is an update from me on the recent Bank of Canada announcement on changes to their Overnight Lending Rate which in most cases impacts your Prime rate.At 10:00 am EST, Wednesday December 4th, 2013 the Bank of Canadaagain did what we expected them to do... they continued to maintain their overnight rate.What this means to you is that once again the prime rate on your mortgage, line of creditor student loan willnotchange and remains at 3.00%. This is fabulous news but don't forget to make themostof the low payments you still have, as the ratewill increase in the future. Theholiday season is upon us which often means ourpersonal spendingon gifts and celebrations will potentiallyblow our budgetsas we spend more than we maybe should... let me help you get back on track with a review of your financial situationwhichmight be a savings plan,purchasing anincome property or debtconsolidation topay off high interest loans or credit cards. If you would like to chat about some budgeting and saving strategies - let me know as I would be happy to assist.Here is an excerpt from the announcement from the Bank of Canada and what they had to say about their decision:"The global economy is expanding at a modest rate, as the Bank expected.Although growth in several emerging markets has continued to ease, growth in the US during the 3rd quarter of 2013 was stronger than forcasted.Even if some of this pickup was due to temporary factors, the data is consistent with the Bank's view of gathering momentum in the US economy. In Canada,the housing sector has been stronger than expected but is consistent with updated demographic data and a pulling forward of home purchases in light of favourable financing conditions. The Bank continues to expect a soft landing in the housing market. Non-commodity exports continue to disappoint and the price of oil produced in Canada has eased further.Business investment spending is up from previous low levels, but is still recovering more slowly than anticipated. On balance, the Bank sees no reason to adjust its expectation of a gradual return to full production capacity around the end of 2015"Based on this news and continued slower level of economic activity in Canada, the Bank does not expect to increase their rate in the foreseeable future with any change most likely to occur in late 2014 or even not until 2015! Remember that any increase to the prime rate since 1992 has only been by 0.25% at anyONE time, so you won't see a large significant increase all at once.Fixed rates did go up but then have come back down since. Right now they are sitting at around 3.39% to 3.59% for a five year fixed term.Based on this recent announcement, and the anticipation that the prime rate will still remain low for a while now, unless you feel otherwise, I'd recommend that you remain with your current variable rate product as the interest is lower than a fixed term rate right now. However if having a fixed payment is important to you, call me so I can calculate what your new payment would look like and also if it is suitable for you. The next announcement on any change to the prime rate is January 22, 2014.
Employment increased by 35,000 in October
In October, employment rose for youth aged 15 to 24, while it was little changed for the core-aged population of 25- to- 54 year-olds, and for people 55 and older. The largest employment increase was in Quebec, followed by Alberta, Manitoba, Newfoundland and Labrador, and New Brunswick. At the same time, there was a decline in Saskatchewan.
Employment rose in several industries, led by other services; construction; information, culture and recreation; and agriculture. Employment declined in wholesale and retail trade.
The number of private sector employees increased in October, while public sector employment and self-employment were little changed.
Canadian home sales edge up again in October
According to statistics released by The Canadian Real Estate Association (CREA), national home sales posted a modest monthly increase in October but remain below levels recorded one year ago.
Newly introduced mortgage regulations mean that starting January 1st, all home buyers applying for a new mortgage will need to pass a stress test to qualify for mortgage financing, said CREA President Andrew Peck. This will likely influence some home buyers to purchase before the stress test comes into effect, especially in Canadas pricier housing markets. A professional REALTOR is your best source for information and guidance in negotiations to purchase or sell a home during these changing times.
Home sales via Canadian MLS Systems edged up 0.9% in October 2017 on the heels of monthly increases in August and September, but remained almost 11% below the record set in March.
National sales momentum is positive heading toward year-end, said Gregory Klump, CREAs Chief Economist. It remains to be seen whether that momentum can continue once the recently announced stress test takes effect beginning on New Years day. The stress test is designed to curtail growth in mortgage debt. If it works as intended, Canadian economic growth may slow by more than currently expected.