On December 5th the Bank of Canada announced that no changes will be made to their overnight rate, which presently sits at 1.75%.

The reason? “The global economic expansion is moderating largely as expected,” they said, “but signs are emerging that trade conflicts are weighing more heavily on global demand… there are upside as well as downside risks around trade policy. In a nutshell: the future is unclear, so we’re going to wait it out and see what happens.

The overnight rate is important to mortgage owners. This rate immediately affects the PRIME rate, currently sitting at 3.95%.  With this news in mind, now is a good time to consider a variable-rate mortgage.

Why? Economists were certain the Bank wouldn’t be raising their rates this month, and they’re agreed that they won’t be raising them next month either. “Looking ahead to January, the [Bank of Canada] will likely need to be convinced to hike (rather than not to hike), so we’ll need to see a solid run of data and oil prices at a minimum hanging in there,” said Derek Holt, Scotiabank economist.

How long can we expect to wait before rates fluctuate again? As per the Bank’s reasoning for standing pat, changes are reliant on economic development domestically as well as globally.  Changes aren’t likely according to Brian DePratto, TD Bank Analyst. “We no longer expect the Bank of Canada to hike its policy interest rate in January,” he said. “Spring 2019 now appears to be the more likely timing, allowing for the Bank to ensure that the growth narrative is back on track.”

For more information on PRIME rate and your mortgage, please contact me, Josh, at 403-241-3255