December 2008 Market Update
The Bank of Canada reduced its key interest rate by ¾ of a point on December 9. In its announcement the Bank stated that Canada’s economy is now entering a recession as a result of weakness in global economic activity. However, the Bank also noted that “money markets and overall credit conditions in Canada are responding to significant and ongoing efforts to provide liquidity to the Canadian financial system.”
The last time the Bank of Canada cut its key rate so deeply was after the terrorist attacks in the U.S. on September 11, 2000. The Bank of Canada indicates, “While Canada’s economy evolved largely as expected during the summer and early autumn, it is now entering a recession as a result of the weakness in global economic activity.”
The bank did not give any indication as to when it anticipates an end to the Canadian recession. Although the depreciation of the dollar and slowly improving credit conditions should help alleviate Canada’s economic distress somewhat.
Averbach Mortgage consultants can explain current trends in interest rates, and their effect on mortgage pricing. Those with existing variable rate mortgages will benefit directly – these mortgages are linked to the prime rate. However, there can be some variation in when lenders react to a Bank of Canada rate announcement. Click here for current rates.
Some lenders respond immediately after a Bank of Canada rate move, while others re-set their prime rate on the first of the following month or wait to make the change at the start of a new quarter! Currently, pricing for new variable-rate mortgages is generally above the prime rate. Those looking for a new variable-rate mortgage may wish to get pre-approved and locked in to protect against dramatic potential changes in the market in the near future.
If you are thinking of refinancing, if your mortgage is up for renewal or you’re thinking of upgrading your current property, please contact us for advice on how to take advantage of the current real estate market. We’ll provide you with the most advantageous loan package available, with your desires and needs as our highest priority.
Call Averbach Mortgages today for expert advice on how to to get the best mortgage … a mortgage that gives you the flexibility to pay off your mortgage sooner!
