BoC Makes No Change to Rates

No-Rate-Change As expected, the Bank of Canada (BoC) did not alter Canada’s key lending rate.

The Bank’s overnight target remains at a record-low 0.25%.

In its much anticipated statement today, the BoC said:

  • “A recovery” is “under way in Canada.”
  • “…Persistent strength in the Canadian dollar (is) working to slow growth and subdue inflation pressures.”
  • “Growth is expected to be slightly higher in the second half of this year than previously projected but to average slightly lower over the balance of the projection period.”
  • “Inflation is also expected to return to the 2 per cent target in the third quarter of 2011…”

The BoC also reaffirmed its conditional commitment to keep the overnight target rate unchanged “until the end of the second quarter of 2010.”

Bond yields dropped on today’s news.  Both the 2-year and 5-year government yields were down eight basis points as of this writing. 

2.90% is now a short-term point of reference on the 5-year yield chart.  We probably won’t see 5-year fixed rates increase much further unless yields break above this number.

In terms of variable mortgages, there is no economist in Canada (that we know of) who is projecting an increase in prime rate this year.

The Bank of Canada’s next interest rate meeting is December 8.  This will be its last scheduled meeting of the year.

  1. This story of the BoC not raising the prime, unless you are living in the artic with no internet, TV or phone, NO KIDDING!!! Yes, it has to be reported, but can we get to what this website was named for: Mortgage Trends!!! I commented and e-mailed yesterday about 5 year closed vrm going down by 2 companies. Today, there are 2 companies at 2.25%, 1 at 2.20% and 1 at 2.25%. They are small companies but this is how the big banks are forced to move. 2 big thumbs up to BMO at starting the trend to move to “prime” at 2.25%. 1 thumb down to Scotiabank for taking 4 business days to match, 2 thumbs down to RBC for reacting after Scotia, and the biggest kick in the butts to CIBC and TD for being last in line.
    But it is sites like this that give the consumer the place to let other consumers know what is going on and try and influence what is happening. So for that, Rob and Melanie, THANK YOU!!!
    As for people on the fence about fixed or vrm, my 2 cents is that vrm will be great for at least 3 years. Think about just one aspect of what brought us into recession: High Oil Prices, which will kill any recovery. Also, the USA killing their own dollar making Canadian $ to expensive, killing our exports. Just those 2 reasons alone will keep the BoC from raising the prime. Remember, the key is to try and get the biggest discount possible off the prime before signing the mortgage. When rates eventually start to move up, there is lots of ‘wiggle’ room between your great rate and the fixed rates so enjoy the savings and be smart with the savings: PAY DOWN THE PRINCIPLE!!!
    Common Big Banks, I will praise the first one of you to lower your vrm again.
    [Edited]

  2. Sorry for the mistake, that is 2 companies at 2.15%, 1 at 2.10%, and most everyone else, including big banks at 2.25%, for vrm 5 year closed.

  3. Thanks for the info Yuen, but could you give me the title for that post because I can’t find it. I looked in all of October’s stories posted.
    My main concern is that we have to keep the pressure up and get the word out everyday that vrm rates are trending downwards. As soon as one company drops their rate, it should be a story. Once consumers know what is out there, they can demand the same rate or take their business elsewhere. I think a “prime -.25%” should be announced by some big bank this week but they won’t do it without pressure. Sites like CMT are vital to this.

  4. Mike I am sure Rob and Melanie have other things to do besides make a story out of every single rate change from every single company.

  5. Mike, if you don’t think today’s BofC rate announcement is a big deal then you are too fixated on VRM’s and not the mortgage market as a whole. Unless you are living in the artic with no internet, TV or phone, you would know that Bank Prime does not always move in lock step with BofC announcements nor the banks discount of VRM’s.
    The “staying the course” BofC rate announcement is a big deal when it coinsides with significant redirection of Bond markets or Cdn$ as is currently happening. All of which is of interest to this CMT reader since it often influences all products.
    Lastly, thanks for the laugh about banks being “forced to move”. With such devine inspiration, I think I will again try to get my toddler to eat his leftover vegetables from last weeks Thanksgiving dinner.

  6. Thank you Richard. I’m sure we all have better things to do. I admit to being a newcomer to this site, but the “fixed vs. variable” question seems to be on a lot of peoples minds. I hope I have contributed a little to help people. If someone is coming up for renewal or looking to buy, I think they would like to know what is happening on a daily basis. Yes, it is up to every individual to do their own research, but having it posted here where so many consumers can view and then demand a better rate, the better it is for all of us. Good luck to everyone. And I think it would be helpful to a lot of people if anyone has any ideas on getting around the IRD to brake mortgages. Besides threatening to take all of your business as well as tell everyone of your bad experience with that institution, is there a legal way out?

  7. Geee. Is there a legal way to “brake” [sic] a contract that you agreed to?
    Why is it that you think you are entitled to “get around IRD” or break a legal contract? You agreed to it, now honor it.
    Why is it that you think you are entitled to dictate the content of someone else’s website — especially one that you pay nothing for.
    If you want rates posted daily, then do it. Otherwise, the correct answer to the question: “What should the owners of “[insert blog name here] post about” should never be “what I want them to post about”. If you find the information here useful, read it. If not, don’t. But don’t come on and tell the owners what the should and shouldn’t post about. Especially when it is clear that you haven’t read the site long enough to even know what it is they post about.

  8. Mike,
    You aren’t the only one looking for a way out of the IRD, I would bet a ton of other people visiting this site are after the same thing. That is actually what led me to this site in July.
    Ted get off your high horse, if people want to find information on how to best negotiate with banks all the power to them, especially when you don’t have any experience with dealing with banks, and don’t know what can and can’t be renegotiated.

  9. Banker in Ivory Tower, LOL. First, BoC rate was totally expected. Big news would have been if they moved the rate. My fixation on mortgage rates has produced my current vrm of 1.75% and I am trying to duplicate that with my next mortgage. When I signed, the rate was 5.25% but I knew what the market conditions were and I was very lucky in timing, but also in the knowledge that vmr was a way better mortgage than fixed for this time period. Please, don’t let me get in the way of your bank giving you what YOU deserve. In fact, why don’t you lie down in the middle of the street and let a bank employee run you over. Then you can cry to everyone how you got jobbed again and life isn’t fair. Or you can try to be productive and help people. Easier to take a cheap shot than to research and bring an informed opinion to the table. And by the way, I know of people who have a better vmr than mine right now. I don’t insult them. I congratulate them and ask for tips and pointers. I didn’t know at the time that you could negotiate the discount. Now I do and I pass on this informations. I don’t imagine such ‘devine inspiration’ as getting as much information as possible would help you much, Banker in Ivory Tower. I hope you can get your little one to eat their vegies, and not to copy your ignorance.
    PS- Since I would rather be helpful than be like you, don’t even worry about what happened today with the Canadian $ and Bonds. It is a knee jerk reaction. Will be back at the same levels by end of the week, maybe sooner. Oil will move the $ higher, debt levels in the USA will make bond yields go through the roof, and if you are unable to handle it, lock in now to a fixed. VMRs will stay low because of the high Canadian $, high oil prices and the risks to the economy. Just my 2 cents based on my research. So throw your dim witted insults out. I will be back tomorrow trying to help get the vrm down everywhere.

  10. THNK YOU JVAN, people like you are why I am here and I will try and help any way I can.
    Ted, I am not looking to brake any contract. I don’t need to. I have already arranged that I can move my current mortgage to a new property or the bank will absorb the fees to keep my business. My only concern in posting that was in seeing a lot of people in trouble and trying to help out. I have sympathy for people since these IRDs seemed to come out of the blue. The penalty used to be 3 months of interest. You must be a banker given your level of compassion for people. And since I have not been blocked or anything, I guess I am still welcome on this site, probably a lot more than you since you don’t seem to want to contribute anything usefull.
    Again, JVAN, thank you, and the only advise I can give you at this moment is to tell the institution you will take all your future business elsewhere. You, your spouse, your kids RESPs (for some reason, banks love those and they are a powerful weapon to use in your favour) and let them know you will tell everyone you know about the poor customer service they gave you. I hope this helps but please, anyone have any other ideas?

  11. Hello Mike,
    Per your point about today’s story, we cover all Bank of Canada announcements because they are major mortgage-related news–regardless of whether the outcome was expected.
    As for future story topics, your input has been noted. Thank you.

  12. Mike, in a single post, I think you have just about offended every broker and competative small lender who reads this site and the tireless efforts of Rob and Melanie at CMT. Every broker’s time waster is someone that shops their mortgage through them for the best rate, only to then take the information to their local big 5 bank and ask them to match it!
    No two mortgages are alike and I believe the advice that reputable independant mortgage specialists provide their clients is worth gold in that regard, but if you disagree and rate shopping is your sole consideration, spare us the campaign and just print off the daily rates found on the statistical data site, cannex.com

  13. Mike you said: “Sorry for the mistake, that is 2 companies at 2.15%, 1 at 2.10%, and most everyone else, including big banks at 2.25%, for vrm 5 year closed.”
    No offense but why is it so important what the big banks are at? Why don’t you just go to the lender that has 2.10%?
    Regardless, I am not sure that this “BoC Makes No Change to Rates” forum is the right place to have this debate.
    Regards,
    Kevin

  14. Now I’ve offended every broker and small competitive lender out there. Well, there’s that, or you could thank me for informing everyone who reads these posts that there are small companies who are offering these rates. Your welcome by the way.
    One of the reasons I am trying to get the big banks to lower is because I would prefer a) for convenience b) to discount all my other services, like daily banking, insurance, cheaper rate on my mortgage, etc. If you could point out one of the smaller companies that do would do this, please set me straight and I will thank you for it. Knowledge is power but for some of the people replying tonight, it seems to bring out the worst in them.
    To Kevin, if 2.10% is the best rate, then I will try to go with them if their services match my needs. If not, I will ask whoever I go with to match or to beat. And since VRM’s are 90% of the time fluctuating with the BoC rate, I think this is exactly the right place to have this debate (but I did start it with the intention of getting the VRMs noticed). BMO started the ball rolling with moving the “prime minus .25%” to just “prime” of 2.25%. Just trying to keep it going.
    And since I look at broker sites regularly, not all of them are honest. Until just this week, some broker sites for the VMR were posting “our rate” 2.25% and the “bank rate” at 2.45%, when everyone was getting 2.25%. And there is still a brokerage site today stating those rates. I do not want to name names, and I don’t want to engage in name calling, those who don’t do their own research will get burned but that is one of the reasons for “my campaign”. I am sure there are a lot of honest brokers and small lenders out there.
    For those who missed it in at least 2 posts and when I put it in CAPS, THANK YOU VERY MUCH ROB AND MELANIE for making this site possible!!! I enjoy reading and posting and learn a few things also. Good mortgage hunting everyone!!!

  15. 3 cheers for today’s BOC announcement. It was great news for those of us in variable rates. I guess this will keep the status quo for prime rate for a while. Hopefully fixed rates don’t buck the trend and continue rising!

  16. Mike,
    With all due respect, I do not like the attitude of going to big banks when smaller lenders are making better efforts, they need to be rewarded not the big ones, this attitude of yours can eliminate competition from the market and then people like you will be at mercy of big banks. I think whoever tries to bring the best deals for customers should get the most customers.

  17. “Bond yields dropped on today’s news. Both the 2-year and 5-year government yields were down eight basis points as of this writing.”
    Excuse my ignorance, but I’m just trying to learn more about bond yields. As I understood it, if the price of the bond goes up, the yield goes down. In other words, if there’s high demand for gov’t bonds, price trends upwards, and the yield goes down.
    With the BoC announcement of no rate changes, I would imagine that there isn’t high demand for bonds, or at least demand hasn’t changed. So how come bond yields dropped on this news?

  18. Hi Bob,
    In very simplistic terms, people bought bonds because the BoC’s statement suggested that inflation was less of an immediate threat.
    Thanks to the inverse relationship between prices and yield, this buying activity caused yields to fall.
    Cheers,
    Rob

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