Current Interest Rates

Category: First Time Buyer,

Summary: Fixed interest rates have been decreasing steadily over the past two months. At the same time, the variable rates have increased (the discounts off of the prime rate have decreased). At this time, the vast majority of clients are going with the 3-year fixed rate.
The changes in rates above in (mostly) green show the difference from 1 month ago.It’s important to note that these rates are not final – we can get better rates in many circumstances. The rate offered is subject to: your lender, date of closing of your mortgage, as well as mortgage size. The sooner the mortgage closes from the rate request, the better the rate, and the higher the mortgage size, the better the rate.
Quick Economic Analysis:
On June 5th, the Bank of Canada (BoC) decreased the overnight rate by 0.25% to 4.75%. This has decreased bank prime rates to 6.95%.

It is widely expected that another rates cut may be on the horizon but inflation unexpectedly rose in May, disappointing the BoC as it deliberates the possibility of another rate cut next month.

The Consumer Price Index (CPI) rose 2.9% in May from a year ago, up from a 2.7% reading in April. This increase primarily reflects higher prices for services and, to a lesser extent, food. According to a Bloomberg survey, economists had expected 2.6% inflation last month.

However, the June inflation data will be released on July 16 (before the July 24 BoC meeting). Barring a significant drop in June inflation, the next interest rate cut will likely be at the September meeting. That’s not good for the housing market, which has slowed to a crawl in recent months across Canada as a whole. Vancouver is still humming along but anecdotally, many buyers are still waiting on the sidelines.

Interest rate cuts will be more gradual because rapid population growth has boosted economic activity (more on that reversal below), forestalling a recession and adding to inflationary pressure. Dominion Lending Centre’s Chief Economist, Dr. Sherry Cooper, expects the central bank’s overnight policy rate, now at 4.75%, to gradually move to 3.0% by the end of next year.

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