UPDATE: CLICK FOR THE APRIL 21st, 2009 INTEREST RATE ANNOUNCEMENT
This morning at its March 3, 2009 meeting, the Bank of Canada cut its key overnight lending rate (the rate at which it lends funds to chartered banks) another half-percent to 0.5%, continuing the trend of historic low rates in an effort to stimulate the economy.
Canada’s big five banks were quick to match the rate cut, trimming prime to 2.5% – a good sign that credit is available and our banks are ready to lend. This should translate into lower variable-rate mortgage products in the coming weeks. If you’re already on a variable-rate mortgage tied to the prime rate, then you’ll get a letter from your financial institution soon, advising you of the change. If you’re lucky enough to have a prime rate -0.85% mortgage, this means that with bank prime being at 2.5%, you’ll be paying a paltry 1.65% on your variable rate mortgage. That’s almost free.
The Bank predicts that fiscal and financial stimulus measures should start to take hold later this year and into next to help the economy recover, and hints that rates will remain at this level or may decrease further until excess supply in the economy is taken up.
The full Bank of Canada news release can be found here.
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