Wednesday, October 22, 2008

Mortgage Rate Update Bank of Canada Rate Reduction

The Bank of Canada reduced the prime rate again yesterday October 21st to 2.25% Canadian banks quickly followed and reduced their bank prime rates to 4.00%

The Bank of Canada reduced its main interest rate by a quarter of a point, less than economists predicted, saying it will probably need to act again to fend off the effects of a credit crisis and global recession.

Bank of Canada Governor trimmed the target rate for overnight loans between commercial banks to 2.25 percent, the lowest since October 2004. Canada's six biggest banks passed the relief on to customers by lowering their prime rates to 4 percent. Canada's dollar fell to the lowest in more than three years as traders bet on more reductions in the central bank's benchmark.

WHAT IS THE BANK PRIME RATE ?

As of October 22, 2008 the Bank Prime Rate was

4.00
%

Bank Prime means "best," and this is the rate that banks charge their absolute best customers for loans. Changes in the prime rate influence changes in other rates, including variable interest rate mortgages. This prime rate rate fluctuates based on economic conditions. Some mortgage companies offer interest rates starting at Less than Prime Rate as an incentive to borrow from them! These are known as "SUB PRIME" Mortgages and we know what happened in the US when too many sub-prime mortgages were given out in the mid 2000's Read more about Sub-Prime Mortgages

For example, see the
Royal Bank Prime Rates

Bank of Canada Prime rates found here

These are the current posted and some 'best' rates



NATIONAL MORTGAGE RATES
TermPosted
Rates*
Best
Rates achievable
6 Month6.20%6.20%
1 Year6.35%4.35%
2 Year6.70%5.35%
3 Year7.05%5.49%
4 Year7.04%5.70%
5 Year7.20%5.65%
7 Year7.65%6.20%
10 Year8.00%6.40%
Variable Rate4.15%
Prime Rate4.00%
* last updated: Oct 21, 2008


Thank you,
Mark

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