Variable mortgage rates dropped by .25% in response to the drop of the overnight key lending rate by the Bank of Canada. This is a great development for the housing market and especially for first time home Buyers.
Home owners with existing variable mortgages with rates discounted from the prime lending rate, now have extremely low cost mortgages boosting their spending power.
The rate cut does not encourage saving because interest rates on savings accounts were also reduced.
The Central bank set its overnight lending rate to .25% - the minimum and the lowest rate since its creation in 1934.
The reason given for this is the intensification of the global recession and the delayed stabilization of the global financial system after the introduction of the previous measures which is expected to result in a deeper recession in Canada than anticipated.
The bank also announced that it intends to maintain the .25% rate until at least June 2010 conditional on the outlook for inflation. Since December 2007 the overnight target rate has been cut by 4.25%.
Wednesday, April 22, 2009
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