Tuesday, July 20, 2010

Bank of Canada Increases prime rate again

The Bank of Canada increased their interest rate they charge to banks from .5% to .75%. This is the second in a row of interest rate increases. There is little speculation that there will be further increases but there is considerable speculation as to the amount of increases.

A sample of the range of speculation is as follows; the C.D. Howe Institute forecasts an increase in the prime interest rate to 2% by the end of 2010 and to 3.75% in one year’s time. Bay Street, on the other hand is forecasting two more 0.25% increases for the balance of this year and then for the Bank of Canada to pause for a while to assess the economy.

With the Bank of Canada increasing their overnight lending rate from 0.5% to 0.75% this morning, the prime interest rate at all major banks has also been increased by the same amount. Therefore the prime interest rate charged by most lenders will increase from 2.5% to 2.75% effective today.

What this means is those who have variable rate mortgages will see their periodic payments increase.

See the best rates available here: Best Mortgage Rates

All the best!
Mark

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