Derek Christiansen, one of our recommended mortgage brokers, sheds some light on the Bank of Canada’s rate increase announcement:

“This will affect variable mortgage holders by .25%.  One increase is no reason to panic – we are at near record low rates.  Variable rate holders can consider converting to a fixed rate at anytime with their lenders but may want to see if the trend continues before rushing to do so.  Ultimately it is up to the individual as to what makes them most comfortable given their financial situation, but oscillations in rates have happened several times over the 14 years I have been working in mortgages, and so far, the clients that have remained variable have benefited from not rushing to lock in to a fixed rate.”  – Derek Christiansen

OTTAWA, July 12, 2017 – The Bank of Canada is raising its target for the overnight rate to 3/4 per cent. The Bank Rate is correspondingly 1 per cent and the deposit rate is 1/2 per cent. Recent data have bolstered the Bank’s confidence in its outlook for above-potential growth and the absorption of excess capacity in the economy. The Bank acknowledges recent softness in inflation but judges this to be temporary. Recognizing the lag between monetary policy actions and future inflation, Governing Council considers it appropriate to raise its overnight rate target at this time.

Governing Council judges that the current outlook warrants today’s withdrawal of some of the monetary policy stimulus in the economy. Future adjustments to the target for the overnight rate will be guided by incoming data as they inform the Bank’s inflation outlook, keeping in mind continued uncertainty and financial system vulnerabilities.

Information note: The next scheduled date for announcing the overnight rate target is September 6, 2017. The next full update of the Bank’s outlook for the economy and inflation, including risks to the projection, will be published in the MPR on October 25, 2017.

To download the complete announcement click here.

Source: Bank of Canada