Bank of Canada (BoC) Interest Rate Announcement Dec 4, 2012

Tuesday, December 4th, 2012


At 9:00 am EST, Tuesday December 4th, 2012, the Bank of Canada again did what we expected them to do… they maintained their overnight rate. What this means to you if you have a floating / variable rate mortgage, line of credit or student loan is that your rate will not change and remains based on prime rate at 3.00%. This is great news as you still have a great low rate and so continue to make the most of the low payments you will still have. Don’t forget as always we recommend you chat with a financial adviser about a Tax Free Savings Account or some RRSP contributions to trigger a potential income tax refund next year as your payments continue to remain low! If you don’t have a financial adviser, let us know and we’d be happy to recommend one to you.

Here is an excerpt of the announcement from the Bank of Canada and what they had to say about their decision:

“The economic expansion in the United States is progressing at a gradual pace and is being held back by uncertainty related to the fiscal cliff. Europe remains in recession, Chinese growth appears to be stabilizing and global financial conditions remain stimulative, though vulnerable to major shocks from the U.S. or Europe. In Canada, economic activity in the third quarter was weak, owing in part to transitory disruptions in the energy sector… the pace of economic growth is expected to pick up through 2013. The expansion is expected to be driven mainly by growth in consumption and business investment, reflecting very stimulative domestic financial conditions.”

Even though Canada’s economy was slower than expected in the last quarter, the bank still expects it to pick up momentum in 2013. They are unlikely to increase their rate in the foreseeable future with any change most likely to occur sometime in mid to late 2013. Remember, that any increase to the prime rate since 1992 has only been by 0.25% at any ONE time, so you won’t see a large significant increase all at once.

Fixed rates haven’t changed much at all since the last announcement, slightly lower at around 3.04% – 3.19% for a five year fixed term.

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