While the Bank of Canada announced earlier today that it is keeping its key policy rate steady, it hinted that a rate hike mabe on the horizon as the Canadian economy grows closer to full capacity.
In an statement the Bank indicated that it expects "growth in Canada to re-accelerate in the second half of 2012." The Bank estimates that the Canadian economy will grow by 2.8 per cent in 2011, 2.6 per cent next year and 2.1 per cent in 2013. It also stated that "business investment is expected to remain strong, household spending to grow more in line with disposable income, and net exports to become more supportive of growth."
What is the impact of the Bank's decision on mortgage rates? The prime rate at most lenders will remain at 3.00%, which means those with variable-rate mortgages will still enjoy relatively low rates. A new variable-rate mortgage can be obtained by qualified borrowers at Prime minus 0.80%, or 2.20%. Home equity lines of credit and variable-rate credit cards are also commonly linked to the prime rate. The pricing for new fixed-rate mortgages is influenced by movements in the bond markets, rather than the central bank's key policy