The dust is settling on last weeks flurry of media activity around the Bank of Canada (BoC) decreasing their key lending rate.
Here’s Where We Are Today:
1. The BoC dropped interest rates by 0.25% (25 basis points). Based on a multitude of factors, Canada’s central bank lowered rates. However, you are not experiencing the entire effect of this cut ...
2. Major Banks only decreased their Prime rate by 0.15 (15 basis points). The BoC’s key lending rate is what Banks base their Prime lending rate on. As the BoC moves their rate up or down, the Banks move their Prime lending rate, but not always in lock-step.
Twice now, major Banks have only passed on a total 30 basis point reduction of a possible 50 points. In fact, last week TD came out of the gates announcing only a 10 point reduction, until later in the day RBC announced a 15 point reduction.
3. Adjustable rates may be increasing. Yes, despite the fact that rates are decreasing, adjustable interest rates could be increasing.
Here’s why …When choosing an adjustable rate Mortgage, lenders “lock in” your relationship to the Prime lending rate. This relationship is set for the term of your Mortgage. This fact isn’t changing.
However, the relationship to Prime may be increasing in the near future. Today, I see a healthy discount to the Prime lending rate of 65 basis points. That means, if you qualify for an Adjustable Rate Mortgage (ARM) your rate would be 2.05% (ridiculous).
I think this relationship discount may be changing, for good.
Your Benefit Of Anticipation
Today, my deep discount to of Prime – 0.65% is still available, but most likely for a limited time.
This rate may be held for up to 120 days. If you plan on looking at homes a bit more seriously this Fall, contact me today to hold this rate until the end of November.
No risk. No obligation. Free of charge.
Make time to investigate your home affordability today!
Talk soon,
Chad Moore
P.S
Adjustable interest rate margins are being eroded by the recent interest rate cut.
Banks do not like this, so they raise interest rates. This has not happened yet, so move quickly and qualify for this deeply discounted product.
If you plan on purchasing a home, do not lollygag around on this one. contact me today.
P.P.S
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