Interest Rates

The Lower Bound for Interest Rates in Canada

How low can we go? While many believe interest rates in Canada just can't get any lower, remember that in 2009 and 2010 the Bank of Canada (BoC) Overnight Rate (that being the rate that ultimately drives Canadian banks' Prime Rates) was down as low as 0.25%. That BoC Overnight Rate is currently at 0.75%.

The Good Old Days, when homes were cheap, or were they?

Ahhh, the good old days.

Or were they, economically speaking? Let's take the early 1980's as an example.

We bought a home in early 1981 near the bottom of the housing crash caused by PE Trudeau's NEP (National Energy Policy), which dropped that home's value by about 20% from $111,000 to the $91,000 that we paid.

Understanding what drives Variable rates and Fixed rates

Your Variable Mortgage Rates are driven by your bank’s Prime Rate which is set individually by each Bank. They normally (but not always) move in sync with changes in the Overnight Rate, which is set by the Bank of Canada (BoC) and is used as a basis for one-day (or "overnight") borrowing between the major lenders and financial institutions.

Analysis of the July 2015 BoC Overnight Rate Cut, a Primer on the current mortgage market, and Predictions on Mortgage Rules to come

Here is a very good analysis of this week's Bank of Canada (BoC) Overnight Rate reduction, how the banks reacted, how this plays into Inflation, possible implications on the housing market, and more.

Low interest rates – the new normal?

Are low interest rates the new normal? Many are beginning to believe this is indeed the case, while as many others are expecting interest rates to return to more historic normals (ie a Prime Rate of around 6%). Economists around the world are divided on the issue, and they all seem to have a good argument to support their position.