Big Deal? - Whaddya think of the Bank of Canada Interest Rate Cut?

This is the the 'big news' this week, and it really is earth shattering, at least in Canada... The big news this week was of course the slash to the prime lending rate by the Bank of Canada, lowering it to an all time low of 2.25%, as predicted.

Chartered banks and mortgage lenders have already started matching the cut by lowering their prime rates. This will most likely be the final cut to the prime rate we will see, however the Bank of Canada has also committed to keeping the rate where it is through to the middle of 2010, which is fantastic for anyone on a variable rate mortgage.

This is great news for anyone who is considering borrowing money. As an aside, when I was in my 20's and early 30's (back in the great depression, just kidding!) back in the 80's and to anyone else that can remember back that far, it was absolutely unheard of for the Bank of Canada Prime Rate to be below 10%. Interest rates at the time were hovering anywhere from 12 to 14% for most of the 1980's Sure rates spiked to 18% and higher for about 3 or 4 months in 1981, but they settled right back down to the mid to low teens shortly thereafter. The point I am trying to make here is that we are talking about a prime rate of nearly ZERO Yes, I am yelling, more like shouting, but ZERO is 0, nada, nil, zip, you can't get a rate any lower than that. To top it off, the Bank of Canada is predicting that we will be at this level for about at least a year. Again, this is incredible news. Read about rates and my story at this page and this is very sobering reading compared to today's rates... Read about the rates in the 1980's http://www.mississauga4sale.com/Lock-In-Short-Term-Long-Term-Mortgage.htm

Now of course, this doesn't guarantee that they won't increase the rate before that time, but it does significantly reduce any chances of a rate increase.

Now that the prime rate has been lowered, it will be interesting to see what will happen with fixed mortgage rates, as fixed rates are more affected by bond yields then by the prime rate. I have already seen some small drops to fixed rates, and I predict that we will see them drop a little further before they bottom out.


We are all beginning to hear more positive things from people in the industry and I feel very optimistic about the coming season.

Today's record low interest rates really seem to be waking many people up and encouraging them to take action.

Here are some of the lowest rates I've seen in the marketplace.

Today's lowest rates:


1 year 2.99%
2 year 3.59 (30 day quick close)
3 year 3.59 (30 day quick close)
4 year 3.79 (30 day quick close)
5 year 3.69 (30 day quick close)
variable 3.00% (prime + 0.75)

All the best!
Mark