The Bank of Canada hiked its key interest rate by a quarter point today, for the second month in a row.
In its statement the Bank noted that it “expects the economic recovery in Canada to be more gradual than it had projected in…April, with growth of 3.5 per cent in 2010, 2.9 per cent in 2011, and 2.2 per cent in 2012. This revision reflects a slightly weaker profile for global economic growth and more modest consumption growth in Canada.”
Most lending institutions are expected to respond to the Bank’s rate hike by increasing their prime lending rates by a quarter point. However, lenders do vary in when exactly they adjust their rates for variable-rate mortgages. Contact an Invis mortgage professional for more information on how a particular lender may implement a rate increase.
Fixed-rate mortgages are not affected directly by today’s announcement as their rates are influenced more by movements in the bond market.
A competitive five-year fixed mortgage rate is available to qualified borrowers at 3.99 per cent, while with the Bank’s rate increase today a competitive variable rate mortgage is available to qualified borrowers at 2.15 per cent (Prime of 2.75 per cent minus 0.60 per cent).
Mortgage holders or potential borrowers should sit down with their mortgage professional to explore their options and decide what makes the most sense for their own financial situation.