Bank Of Canada Cuts Interest Rate to 0.25% At April 2009 Meeting


To the surprise of many analysts, this morning at its April 21, 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 0.25%, continuing the trend of historic low rates in an effort to stimulate the economy. Since December 2007, the Bank has trimmed 4.25% off its overnight lending rate, which has had the effect of lowering mortgage rates (especially variable rate mortgages).

Two of Canada’s chartered banks were quick to match the rate cut, trimming prime to 2.25% – 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 2.25%, you’ll be paying a paltry 1.40% on your variable rate mortgage. That’s almost free.

The Bank predicts that fiscal and financial stimulus measures initiated by governments and central banks worldwide have been slower than expected to take hold, and will be holding the 0.25% rate until the end of the second quarter of 2010, barring unforeseen circumstances. All this means that recovery of our economy is going to take longer, starting late next year, with the economy reaching full capacity in 2011.

The full Bank of Canada news release can be found here.

Tim Ayres – Sooke Real Estate Professional

Your comments are welcomed and encouraged!
Just use the form or link below this post.

You can bookmark this post using the button below,
or subscribe to this blog for free updates using the big buttons on the sidebar!

Published by Tim Ayres

Tim Ayres is a Sooke and Victoria BC REALTOR®, with Royal LePage Coast Capital Realty. Tim is actively involved in helping clients buying and selling real estate in the southern Vancouver Island region. Tim is an active member of the Victoria Real Estate Board and served seven years (2009-2015) as a director, including serving as President in 2014.

One thought on “Bank Of Canada Cuts Interest Rate to 0.25% At April 2009 Meeting

Leave a Reply