The Bank of Canada (BOC) held it’s overnight rate January 9th 2019.
What does this mean?
This means no changes to your variable rate mortgage and lines of credit rates or payments. Prime rate remains at 3.95% with most lenders (not all lenders have the same prime rate).
Are there rate increases coming?
Some economists are forecasting rates will rise 0.25% to 0.75% by the end of 2019, some economists are forecasting rates to stay the same throughout 2019, others have discussed a potential decline.
In December 2018, forecasters leaned quite heavily towards rate increases. Now, in the first month of 2019, forecasters are leaning towards rates staying the same for the year. The Bank of Canada’s tone has changed…
What is the Bank of Canada saying to switch forecasts?
To quote them verbadem: “The appropriate pace of rate increases will depend on how the outlook evolves, with a particular focus on developments in oil markets, the Canadian housing market, and global trade policy.”
Oil markets: “Global benchmark prices for oil have been about 25 per cent lower than assumed. The drop in global oil prices has a material impact on the Canadian outlook.”
Overall consensus amongst experts is oil prices will see continued pressure however prices are up from their October 2018 lows.
Canadian housing market: “Consumption spending and housing investment have been weaker than expected as housing markets adjust to municipal and provincial measures, changes to mortgage guidelines, and higher interest rates. Household spending will be dampened further by slow growth in oil-producing provinces. The Bank will continue to monitor these adjustments.”
There continues to be a quieter housing market across Canada in general.
Global trade policy: “The global economic expansion continues to moderate, with growth forecast to slow to 3.4 per cent in 2019. There are increasing signs that the US-China trade conflict is weighing on global demand and commodity prices.”
Canada-Chinese relations are on rocky ground as well.
The next Bank of Canada scheduled date for announcing the overnight rate target is March 6, 2019.